Stocks on Wednesday broke 40,000-points-barrier for the first time in 36 sessions, rallying for the fourth straight day, primarily fueled by the much-expected positive reforms for various sectors in the economic package that was announced later in the evening by the finance minister, dealers said.
Analyst Ahsan Mehanti from Arif Habib Corporation said stocks closed stronger amid higher trades led by autos, oil and banking scrips on speculations ahead of mini-budget and $3 billion bailout package agreement with United Arab Emirates (UAE).
“Upbeat economic data on trade deficit, home remittances, external account and expectations for capital market tax reforms in the mini-budget helped build a bullish close at the apex bourse,” Mehanti added.
Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 0.39 percent or 155.64 points to close at 40,057.85 points level. KSE-30 shares index followed suit with a high of 0.39 percent or 74.62 points to end at 19,224.39 points level. Of 365 active scrips, 210 moved up, 127 retreated, and 28 remained unchanged.
Investor participation further progressed as the ready market volumes reached 178.989 million shares, as compared with the turnover of 136.802 million shares in the previous session, while traded value also increased by 8 percent to $53 million. Salman Ahmad, director institutional sales at Aba Ali Habib Securities, said sentiment was upbeat because of the State Bank of Pakistan’s signing an agreement with UAE’s financial institution for a $3 billion bailout.
“The market is expected to score big if the government announces measures as promised,” Ahmad said adding investors hoped the government would cut advance tax to 0.01 percent from 0.02 percent on buying and selling of shares.
The reduction will also help improve the daily volume, which has thinned substantially following a hike in the tax rate, Salman added.
Investors were divided on the outcome of the mini-budget. Auto shares recorded gains on expectation that the government was likely to increase the withholding tax on non-filers but would allow them to buy vehicles as it had drastically affected the sales of the auto sector. Moreover banks remained in the limelight on the reports and assurance from the Revenue Minister Hamad Azhar to Karachi Chamber of Commerce (KCCI) members that the government would benefit filers by voiding the tax on cash withdrawal.
The cash withdrawal up to Rs50,000 would be exempted from withholding tax of 0.03 percent. This would help improve cash transaction and turnover.
A leading analyst said that the government’s stance to announce policies through mini-budget would increase investment and boost sentiment of business community. If customs duties on raw materials are reduced it will propel industrial activity and improve exports.
The highest gainers were Indus Motor Company, up Rs35.92 to close at Rs1269.42/share, and Millat Tractors, up Rs20.67 to finish at Rs790.45/share.
Companies that booked highest losses were Unilever Foods, down Rs90.00 to close at Rs7010.00/share, and Sanofi-Aventis down Rs24.49 to close at Rs825.51/share. Bank of Punjab recorded the highest volumes with a turnover of 13.759 billion shares. The bank’s scrip gained Rs0.12 to close at Rs13.18/share.
The lowest volumes were witnessed in K-Electric Limited recording a turnover of 14.980 billion shares, whereas the scrip lost Rs0.01 to end at Rs6.62/share.