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Tuesday March 19, 2024

Stocks rally on hopes of lax tax regime in supplementary finance bill

By Our Correspondent
January 15, 2019

Stocks on Monday pulled ahead as the upcoming mini-budget, hyped to be centered on ensuring ease of doing business and cutting the input cost for export-oriented sectors, set off a steady rally, but economic concerns weighed on volume, dealers said.

Topline Securities in its market review said the third budget of FY2019 was also expected to reduce/eliminate advance tax of 0.2 percent on brokers and rationalise group taxation system, which too improved the sentiments.

The brokerage further said favorable winds continued in Gas Infrastructure Development Cess (GIDC) beneficiaries (FFC and FFBL) and pharmaceutical Scrips for the second day.

“The former got the boost due to a sizeable one-time and recurring gains post resolution (50 percent waiver) of this matter and the latter due to Drug Regulatory Authority of Pakistan’s (DRAP) notification about the increase of up to 15 percent in the price of medicines across the country,” Topline added.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index gained 0.93 percent or 363.47 points to close at 39,412.55 points level. KSE-30 shares index followed suit with a high of 1.01 percent or 188.58 points to end at 18,803.72 points level.

Of 356 active scrips, 241 moved up, 93 retreated, and 22 remained unchanged.

Lack of clarity on economic front however held the investors on a tight leash and as a result participation in terms of volumes declined 7 percent to 115 million, while traded value decreased 14 percent to $39 million.

Analyst Ahsan Mehanti from Arif Habib Corporation said stocks closed bullish led by scrips across-the-board on speculations ahead of mini-budget announcement on January 23 after finance minister firmly committed to ensure gains for the PSX. “Foreign inflows, higher global crude oil prices and expectations for stronger financial results led to a higher close at the PSX,” Mehanti added.

Adil Ghaffar, CEO of First Equity Modaraba, said government had shown its flexibility in resolving issue of Gas Development infrastructure charges (GIDC).

“Expectations of a favorable second mini-budget … that is said to be focused on increasing exports and addressing tax anomalies/structure boosted sentiment,” Ghaffar said. The capital market kicked off on a positive zone and stayed there mainly on finance minister’s assurance that January 23’s mini-budget holds good news for the stock market.

Hamad Aslam, director research at Elixir Securities said finance minister promised that the upcoming measures … were aimed at promoting the investment climate in the country.

“Positive momentum was thus observed across the board with the highlight of the day being the automobile assemblers, beside this the market also saw fresh buying in pharmaceutical sector, following an increase in drug prices in the range of 9 percent to 15 percent.

The highest gainers were Sanofi-Aventis, up Rs40.02 to close at Rs859.00/share, and Service Industries Limited, up Rs24.35 to finish at Rs815.00/share.

Companies that booked highest losses were Sapphire Textile, down Rs43.78 close at Rs1300.23/share, and Millat Tractors down Rs20.24 to close at Rs774.85/share. Pakistan Elektron recorded the highest volumes with a turnover of 13.618 billion shares. The scrip gained Rs0.81 to close at Rs28.41/share.

The lowest volumes were witnessed in Atlas Honda Limited recording a turnover of 20,600 shares, and losing Rs5.54 to end at Rs385.10/share.