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September 16, 2018

PSX remains dull as investors await govt action on economy


September 16, 2018

The market closed flat this week, as activity remained range-bound due to a lack of positive triggers and mixed news on economic measures to be taken by the new government, analysts said.

An analyst from BMA Capital Management said announcement from the government for tackling twin deficits would be a welcome development that the market would track. The next week would be cut short due to two religious holidays, and trade would remain dull, he added.

“The investors are likely to focus on law and order situation in the country. Materialisation of rumours on prime minister’s potential visit to Saudi Arabia may create near-term excitement in the market,” the analyst added.

Faisal Shaji, strategist at Standard Capital said, “The market behaviour remained topsy-turvy though some encouraging signs appeared in selected companies and few key scripts hit upper caps.” Biggest threat remained selling by emerging market funds in certain heavyweight scripts which have been affecting markets though their selling across the board in every other emerging market. “We believe incumbent government should also build confidence of local and foreign investors,” he said. An analyst from Topline Securities said the KSE-100 index closed flat in the week under review, as the market added a meagre 65 points to the index.

“At the start of the week, the market was abuzz with possibility of a gas price hike which resulted in negative sentiment among investors. However, the market rebounded as investors anticipated clarity on economic measures in the meeting of ECC held on September 13, 2018,” the analyst said. Foreigners sold $26.1 million worth of shares during the week versus net selling of $9.9 million last week. On local front, insurance companies and mutual funds were net buyers amounting to $11.8 million and $10.6 million, respectively. The key highlight of the week turned out to be the ongoing chatter regarding upcoming ‘mini-budget’ aimed at elevating the government’s revenue while also cutting down expenses at the same time. It has been proposed to jack up the tax revenue by Rs100-Rs125 billion through the imposition of additional custom and regulatory duty, while trimming the Public Sector Development Program allocation by a whopping Rs330 billion to Rs430 billion.

The on-going rumours regarding textile relief package (focused on lowering power tariff for textile companies) helped the overall sector conclude the week on a positive note.

Junaid Islam from Habib Metro-Finance said the market was expected to remain muted until the formal revision in the Finance Bill. “Should the circulating rumours materialise, we foresee considerable pressure on the index as additional taxes would jack up the input cost of doing business,” he added. The analyst told the investors to wait and watch, while keeping spare cash to avail the price discounts that might be in the offing.

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