Market Daily: Bullish sentiments, possible bailout package, KSE100 gains 944.61 points

LAHORE: After weeks of disappointment, investor’s optimism pushed the markets towards recovery. Capital Stake Director Research Maha Jafer Butt told Profit, “Bullish sentiments in the market were a result of positive developments over the weekend. The possibility of a bailout package from the Prime Minister, foreign investors ending the week as net buyers and appreciation from the United States President were among factors that contributed towards today’s surge.”

Following the meeting with Prime Minister Abbasi and PSX stockbrokers, the possibility of a bailout package has revived the market. A delegation of around twenty-five officials of the exchange and stockbrokers called on the Prime Minister with a recommendation to form a fund worth Rs 20 billion that would be injected into the PSX to revive the market.

They also highlighted other issues faced by market participants, taxation being one of them. Currently, there are multiple taxes paid by listed companies, brokers and traders at different levels. They include 31 per cent corporate tax, 3 per cent super tax, 15 per cent dividend tax, 15 per cent capital gains tax (CGT), taxes on bonus shares and more. It is noteworthy that Asia’s best performing market of 2016 has dropped 25 per cent in just about four to 39,478.05 points, below its 52- week low, from an all-time high of 52,876.46 points on May 24.

Maha said  that despite positive signs the market is not fully out of the danger, “liquidity and domestic politics continue to be causes of concern for investors and are likely to shape the market in days to come.”

The session on Monday was a traders dream, the indices skyrocketed from the word go. The benchmark KSE 100 index jumped to an intraday high of 40,813.53 up 966.75 points or a massive 2.37 per cent and settled at 40,791.39 after a 944.61 point gain. The KMI 30 index surged 3.23 per cent to 68,461.04 while the KSE All Share Index jumped 1.92 per cent or 561.72 points. A total of 263 companies advance while 82 declined.

The market volumes didn’t demonstrate any appreciation indicating low investor confidence. The volume chart was ruled by Chakwal Spinning Mills Limited (CWSM -15.06 per cent) where 10.98 million shares were traded. The script nosedived 47 per cent in the last trading week. Aisha Steel Mills Limited (ASL +6.06 per cent) was next on the chart with 6.66 million shares exchanged and TRG Pakistan Limited (TRG +4.98 per cent) with a volume of 5.56 million succeeded.

Buying was seen across the board. The refinery sector was top performer which added 4.91 per cent to its market capitalization Byco Petroleum Pakistan Limited (BYCO) after an intraday cap closed up 4.82 per cent, Pakistan Refinery Limited (PRL) also touched its upper circuit breaker and ended higher by 4.96 per cent and Attock Refinery Limited (ATRL +5.00 per cent).

Movements in other sectors were as follows; engineering sector 4.65 per cent, Oil and Gas Marketing Companies 3.92 per cent, Cement sector added up 3.83 per cent to its cumulative market capitalization.

While commenting on developments during the last week, Maha commented that the coming week will be largely driven by details of the package and the NAB hearing. Fundamentals are not currently playing a big role due to political uncertainty. She added that it would be an interesting yet crucial week in the market as the political saga uncovers.

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