PROFIT-TAKING PERSISTS OVER POLITICAL NOISE, INDEX DOWN 5.4PC
The investors in the Pakistan Stock Exchange remained in uncertain mode during the last week due to political suspense created by the appearance of Prime Minister Nawaz Sharif before the JIT (Joint Investigation Team) and its controversies surrounding Panama Pagers case. Added to the woes of falling KSE-100 Index of 2,668.36 points during the week, was the pressure in oil and banking stocks on dismal earnings outlook; the falling foreign outflow of $9.49m; weak global crude prices; weak banking spreads; additional tax levies in cement sector and the super tax levies in the federal budget. The market capitalization during the week declined to Rs9.364, taking a fall of Rs495 billion, while average volume increased to 255 million. The KSE-100 Index on Friday closed at 46,858.56, the lowest level in six months.
The stock market witnessed its biggest decline in term of points on Monday 1,855.12. Investors panicked and reacted negatively to the weekend news that PM Nawaz Sharif is due to appear before the JIT on alleged corruption charges against him and family on June 15 (Thursday). The market capitalization saw Rs320 billion hacked off. Within the sectors, Banks shed 373 points , E& P‘s 259 points, Fertilizer 253 points, Cement 243 points, OMC’s 151 points and Power 122 points. The effect of this fall has wiped off entire gains of 1,720 points by the market since January 1, this year. The Index closed at 47,671.80.
Stock recoup losses on Tuesday as it gained 3,99.24 points to close at 48,071.04. The possible upsurge in fundamentally strong scrips available at low valuations attracted investors. The volume too increased by 45 percent to 317.176 million shares.
The stock market continued to witness volatile trading on Wednesday and failed to build on Tuesday gains. Investors took advantage of the morning surge and resorted to booking profits . The stocks crumble under selling pressure and ended the day shedding 462.40 points to close at 47,608.64.
Mixed trend prevailed on Thursday . The stock market opened negative but recovered to jump 450 points hitting intraday high of 48,091.82. Following the PM appearance before the JIT the Index fell back and it finally close at 165.91 points at 47,442.73.
The bearish trend continued on third consecutive day Friday when KSE-100 Index lost 584.17 points to close at 46,858.56. This was a staggering decline of 11.8 percent hitting its peak on May 25. Three obvious reasons, which appear for the decline are budgetary measures, outflow instead of inflow following the country’s entry into MSCI emerging market index and lastly market is in grip on political uncertainty due to on-going panama case.
On average shares of 359 companies were traded. Of these 110 were gainers and 231 were losers and 18 remained unchanged.
Foreigners were net seller of around $9.49m during the week; companies were net seller $6.46m, Banks were buyer $5.96m; Mutual fund net seller $3.77m and individuals net seller $4.84m.
Volume leaders during the week were: Power Cement 235m; BOP 91m; K-Electric 56m; Engro Polymer 54m; TRG Pak Ltd 49m; Dost Steel Mills 28m; World Telecom 26m; Aisha Steel Mills 22m; Oil and Gas Dev XD 6m.
– Foreign Exchange reserves fall by $358m as on June 9.
– Changes in CGT rates
– All shares being purchased before June 30, 2017 will be treated for tax purpose under the old three-tier capital gain tax
– Dividend income of mutual funds will be taxed at the rate of 10% instead of 12.5%.
– The service tax of PSX and Pakistan Merchandise Exchange was lowered from 8% to 2%;on listed derivatives the tax rates have been reduced from 15% to 5%; cut the proposed 10% income tax on listed companies that do not distribute at least 40% of their after tax profit through cash or bonus share to 7.5%.
Political uncertainty to continue as Panama JIT is entering into final phase of decision making. RSI and MACD are heading downward supporting bearish view . Next target could be 45,726 and resistance level will be around 4,7630-47,865.