KARACHI – The government’s decision to impose flood surcharge, enhancement of SED and GST on fertiliser has rippled on the bourse. The ambiguity related to the imposition of flood surcharge on corporations kept the investors away from the market. The market started off on a positive note but remained in the red throughout the day.
The KSE index closed at a level of 11,794.57 with a loss of 34.67 points, while total volume stood at 76,098,980 along with the total value of 4,723,771,904. KSE 30 index lost 34.64 points to close at 11,442.97, and All Share index closed at 8,282.15 after losing 24.28 points. Morale was affected mainly due to the government decision to impose 15 percent flood surcharge on corporations and individuals, as well as a 17 percent sale tax on fertiliser, both to be implemented with immediate effect.
Because of this, FFC remained under pressure throughout the trading session and traded with low volumes of 3.6 million shares. Engro, on the other hand, responded positively to the meeting 80 percent of the gas requirement of the fertiliser plant, which will help it to raise production. The KSE-100 index closed down at 11,795 level with 108mn shares traded with mostly locals participating in blue chips and 2nd tier stocks.
Bilal Asif at HMFS indicated that additional tax measures are largely inflationary in nature, but hopefully the IMF should be releasing another tranche after the ‘mini budget’. The stock market is likely to view the developments positively, but he indicated a need for caution due to global economic fundamental changes before investing in the market, he added.
Popular stocks, with a high speculative tendency and ability of trading at improved multiples, with the support of ready board leverage, along with various dividend yielding and high growth stocks, kept liquid participants active. However various issues forced participants to be restrained in trading, despite a volatility of two percent in the benchmark and much higher in selective stocks.
Settlement of issues in political terms, implementation of tough decisions of tax implementation to fulfill the preconditions of the IMF for release of pending tranches of reserve support fund, will provide cosmetic support to the ailing economic and financial situation.
Availability of dividend yielding stocks reporting consistent growth and available at discounted multiples due to recent sell-offs can be encouraging for both trading and placements, Hasnain Asghar Ali at Aziz Fidahusein stated.
