Bourse recoups losses on liquidity injection, rupee recovery

Stocks market managed to pare some losses during the outgoing week on belated approval of state-backed funds to buttress the bourse, dealers said, saying budget developments would set direction in the next shortened week and ahead.

The capital market remained under extreme volatility owing to economic targets set for the next fiscal year, but an approval of the stock market funds and rupee gains helped the index close on positive note during the outgoing week.

Anticipation of market support funds attracted positive sentiments alongside the better volumes. The four-day week commenced on a negative note as lack of clarity over the funds pushed the index down to an intra-week low of 34,949 points during the first half of the week. But, later bulls took over after the Economic Coordination Committee approved the market support fund worth Rs20 billion to buy selected shares to support the index.

The rupee gained some strength against the greenback, which further kept the sentiment positive and helped the bourse bounce from the lows and gained 0.8 percent or 270 points to close at 35,974 points.

Brokerage BMA Capital said the market activity is expected to revert to pre-Ramazan levels with the focus expected to attune with the news flows and developments related to the budget. “Market sentiments are likely to be dictated by expected taxation targets and measures, rise in energy rates, and policies around subsidies,” BMA said in a report.

“With the incumbent government expected to present its maiden federal budget in the week following Eid holidays, we anticipate investors to take a cautious stance,” Arif Habib Limited said in another report.

Positive sector-wise contributions came from commercial banks (174 points), oil and gas marketing companies (120 points), automobile assemblers (53 points), oil and gas exploration companies (41 points) and tobacco (34 points). Sectors that contributed negatively included fertilisers (93 points) and textile composite (61 points).

Scrip-wise positive contributions came from UBL (67 points), BAHL (60 points), LUCK (58 points) and PSO (44 points). Negative scrip-wise contributions came from FFC (66 points), HBL (65 points), and NML (44 points).

Foreign selling clocked in at $2.95 million compared to a net buying of $0.02 million last week. Average volumes settled at 165 million shares, down eight percent from the preceding week while value traded clocked in at $48 million, up 22 percent from the preceding week.

A leading trader said sentiments got cemented after the approval of Saudi oil deferred payment facility of $3 billion/year, giving a cushion to the country’s foreign exchange reserves. Other major news that impacted the market included increase in taxes on cigarettes, reduction unaccounted for gas losses, electricity tariffs hike and oil price increase.