Stocks ended the outgoing week with a massacre courtesy the super tax that hit the unsuspecting corporate sector like a bombshell, analysts said, expecting the market to track IMF inflows to find heading next week.
“We believe clarity should emerge next week on certain economic policies, which should aid sentiments at the bourse,” Arif Habib Ltd said in its weekly market review.
Pakistan has met all requirements to enter into the IMF programme to receive the $1 billion tranche, the brokerage said.
“Once the package comes through, other sources of forex inflows should also open up, which should relieve some pressure on our dwindling dollar reserves of the country.”
It added that as the $2.3 billion Chinese loan had already been credited to Pakistan, the market was mostly seen positive.
JS Research, said the 10 percent incremental tax on certain sectors wiped out more points from the index than it had gained in the week.
“The named sectors account for a significant portion of the listed space,” the brokerage said.
The unexpected announcement took the week close to -1,089 points (-2.6 percent week-on-week).
The local bourse had gained 576 points in the four trading sessions on the progress made by the government in IMF talks. With that, the rupee also reclaimed some lost ground this week, up Rs4, after touching an all-time low level of Rs211.7 against dollar.
The week started on a negative note on account of uncertainty over the IMF programme. The index shed 300 points DoD. However, sentiment turned positive when a Chinese consortium of banks signed a $2.3 billion loan facility agreement, and the ECC approved the second installment of Rs96 billion to the IPPs of the 2002 power policy. Furthermore, the finance minister announced that an IMF deal was imminent, which also helped boost investor sentiment.
SBP reserves decreased by $748 million to $8.24 billion, which pressed the rupee down to an all-time low of 211.93/ dollar; however, the China loan deal strengthened the rupee to close higher at 207.48 for the week.
The market ended at 41,052 points, down by 1,089 points. Average volumes clocked in at 301 million shares, up by 73 percent week-on-week, while average value settled at $44 million, up by 72 percent week-on-week.
Foreign selling clocked in at $2.39 million compared to a net sell of $1.91 million last week. Major selling was witnessed in all other sectors ($3.5 million) and banks ($1.9 million). On the local front, buying was reported by individuals ($7.0 million) followed by other organisations ($3.4 million).
Sector-wise negative contributions came from banks (296 points), E&Ps (194 points), cement (194 points), fertiliser (120 points) and textile composite (61 points). Stock-wise negative contributors were UBL (97 points), POL (88 points), ENGRO (83 points), LUCK (79 points) and HUBC (75 points).
Sectors which contributed positively were tobacco (12 points), insurance (12 points), and paper & board (8 points). Meanwhile, scrip-wise positive contribution came from EFUG (20 points), KEL (18 points), KAPCO (13 points), PAKT (12 points) and PKGS (8 points).