The week saw cautious behavior from investors, as the budget approaches near. The market exhibited an average daily volume of a meager 68.8 million shares, while the current average volumes stayed at around 68.3 million, well below the current year’s average daily volume of 106 million shares. This was primarily because of the preceding year’s implications of capital gain tax (CGT), which gradually washed away stock market volumes and impacted returns. Rumours loomed large especially with regards to an enhancement of corporate tax from 35 to 40 percent on banks and corporate sectors. This may be considered as a major threat to investment valuation and lead to a decline in earnings. Revenue constraints and lack of fiscal space are other factors that have threatened market performance. The FBR, with minimum effort, will look to enhance the revenue base. Furthermore, the IMF influence may be much greater during the current year, keeping in the constrained resource enveloped. Better remittance inflow, along with higher exports, are largely on account of cotton prices rather than the tangible export growth. In addition, improved wheat crop has provided some cushion as agricultural and GDP growth is likely to improve. However, the IMF repayment schedule, likely to commence shortly with a CY11payment of $362 million followed by $2,467 million in CY12, may also hit the resource basket, said Bilal Asif at HMFS. The index did touch the 12,000 points level. However, it could not sustain this level at close. Market performance stayed dull as volumes remained thin throughout the week. The benchmark saw an inflow of around $15.6 million, but its impact was negligible. Issues with gas curtailment and price hike kept fertiliser stocks in the limelight.
