KARACHI: After closing the last week on a positive note, expected raise in interest rate and the proposed mini-budget may haunt the Pakistan Stock Exchange in the new week.
Other negative factors for the market remain rising current account deficit, increasing core inflation and depreciating exchange rate, which may keep the investors at bay; however, the market may give any surprise in case of less-than expected increase in policy rate (150bps).
The State Bank’s Monetary Policy Committee (MPC) will meet on Tuesday to discuss and announce a possible revision in the policy rate. Yields on three-month treasury bills (T-Bills) in an auction held on December 1 had jumped by 228 basis points as the government only accepted bids worth Rs504.3 billion in all three tenors against a target of Rs750 billion.
Reportedly, the government has finalised a mini-budget involving fiscal adjustments and expenditure cuts worth about Rs600 billion as part of an understanding with the International Monetary Fund (IMF).
A draft of Tax Laws (Fourth) Amendment Bill 2021 for abolishing almost around 100 tax exemptions as a standard rate of 17 percent General Sales Tax (GST) would become applicable with approval of the parliament.
The KSE-100 Index gained 163 points (+0.38 percent) to close at 43,232.83 points on a week-on-week (WoW) basis. Sector-wise, positive contributions came from oil and gas exploration (320 points), technology and communication (257 points), food and personal care (32 points), chemical (29 points) and insurance (10 points). Sectors that contributed negatively to the benchmark index were commercial banking (187 points) and cement (112 points).
