Friday saw a bullish trend in trading activity at the volume-starved Karachi Stock Exchange on expectations of ‘favorable’ announcements in the forthcoming State Bank’s discount rate policy and the federal budget.
On the last trading day of the week, the benchmark KSE 100-share index closed at 11,973.38, some 94.57 points higher than 11,878.81 points on Thursday.
“Bullish activity was witnessed ahead of SBP policy announcement this Saturday as hopes mounted for favorable announcements on KSE proposals for the reporting of capital gain taxes (CGT) by small investors and a rise in tax credit for new listed firms in the federal budget,” said Ahsan Mehanti, Director Arif Habib Investments.
The index hit the intraday high and low of 11,983.04 and 11,840.03 points, respectively. Strong institutional and foreign interest in the blue chip scrips helped the equity market make some recovery on the volumes front as the day witnessed a turnover of 44.371 million shares against 40 million of the previous day.
Mehanti said that investors remained bullish throughout the trading session on Friday, led by the commodity stocks triggered by strong institutional and foreign interest in blue chip scrips. This, the analyst said, was despite concerns regarding the rising circular debt in the energy sector. Market capitalisation exhibited a growth of Rs 20 billion and closed at Rs 3.174 trillion, when compared to 3.154 trillion on Thursday. Bank Al-Falah, with a turnover of 7.93 million shares, was the volume leader.
The future market, which had tumbled head-on a day earlier seeing a meager turnover of 0.979 million shares, showed some recovery and closed at 1.79 million shares. Another market observer Hasnain Asghar Ali of Aziz Fidahusein said that budget leaks, suggesting high chances of an acceptance of proposals, to change the implementation mode of CGT by the officials, allowed the local participants to arrest low volume decline during early trade and disallowed panic.
He said the “budget leaks” regarding a likely change in the CGT implementation mode led to low volume recovery by the benchmark in an otherwise dull session. “Renewed buying in dividend-yielding stocks and speculative activity in various high-priced stocks following an initial setback disallowed the red numbers, prominent in various frontline expensive stocks facing various threats to dominate the benchmark,” he added.
The proposed change in the CGT collection would result in an increase in revenues from equity market activities besides providing the market with the desired depth with financing through Margin Trading System, available at cheaper rates, he said.
