KARACHI: Stocks closed bullish on Monday in the post budget session led by cement, textile and fertilizer scrips cheering textile package, record Federal PSDP of Rs700b and Agri incentives.
The KSE-100 Index rose by 138.62 points or 0.4 pc to close at 34151.11 points. The market witnessed sharp volatility today. The day’s trade began with a dip of -875 points dominated primarily by selling in the banking sector. The selling spree was quick to spread across all sectors marked by institutions and individual selling alike.
Umair Hasan at JS Global observed, as if shrinking NIMs on the back of all time low interest rates were not enough, the government imposed a 35pc flat tax rate on all-incomes earned by banking companies in the budget announced recently. This led to strong pressure across all banking scripts as BAHL, BAFL, HBL, MCB, NBP, and UBL were all down by 5pc, 5pc, 4.4pc, 4.3pc, 3.3pc and 3.9pc.
After witnessing a sharp downside, institutional buying was witnessed across all under-valued sectors. The main beneficiary was the Cement sector. Lower discount rates and a healthy PSDP fund along with housing credits and tax exemptions all proved to be positive for the cement sector. This was apparent by an unusual number of cement scripts hitting their ‘upper-circuits’ with CHCC, DGKC, FCCL, FECTC, KOHC, LUCK, MLCF and PIOC ending 5pc up. Oil sector also remained green through the day’s trade with POL, PSO, SHEL all attracting investor interest.
Traded volumes of 450m shares stood 17-week high while value Rs.21.9b/ $219m not seen in 14 months. Banking stocks declined as according to the budget proposal that tax on all source of income of banks will have a negative impact on sector’s earning. MCB declined by 3.77pc, NBP 2.82pc, UBL3.97pc and HBL 4.25pc, analyst at sales desk Topline worked out.
Cement stocks rallied up to 5pc upper limits like, LUCK, DGKC, MLCF and CHCC etc, after higher development expenditure allocation and tax on cement imports.
Announcement of textile package in budget, and reduction in ERR (Export Refinance Rate) brought renewed interest in the sector. NML gained 2.85pc and KTML rallied 5pc. Ahsan Mehanti at Arif Habib Corp said banking stocks battered on levy of super tax and 35pc uniform tax on all income sources.
Expectations for higher dividend payouts in the listed corporate sector amid levy of 10pc on undistributed reserves played a catalyst role in bullish activity at KSE ignoring higher tax on dividends, super tax and CGT rates revisions.