KARACHI: The bulls took a breather in the outgoing shortened (four session) week with an addition of 271 points (0.8 per cent) to close at 35,975. The market needed a cooling-off period after the mind-blowing gains of 2,537 points or 7.65pc, the highest weekly return in 10 years in the preceding week.

For the outgoing month (April), the KSE-100 index lost 809.65 points (2.20pc) with main contribution to downside coming from Fauji Fertiliser, lower by 11.27pc, MCB 4.86pc and Fauji Fertiliser Bin Qasim 33.01pc which together took away 319 points.

In the outgoing week, the market support fund remained shrouded in uncertainty, which pushed the index to intra week low of 34,949. However, emergence of clarity from official channels about the funds and outlines of details helped take a fresh start upwards.

Foreign investors emerged as net sellers during the outgoing week offloading positions worth $2.9 million. The outflow was mainly concentrated in exploration and production (E&P) amounting to $5.9m and fertilisers of $0.7m. Foreigners put $1.7m in the power sector. Amongst domestic participants, banks emerged as net buyers of equity worth $5.2m.

Sector-wise, market performance followed the news flow. The government announcement of tax target of Rs5.55 trillion for FY20 caused quite a commotion in the industry as it realised that meeting such an ambitious target would mean harsh taxations measures. The government was also reported to have decided to withdraw benefits available to zero-rated sectors, sparking much protest from relevant industry players.

Textile sector underperformed the benchmark by 2.7pc while pharmaceuticals and oil marketing companies outperformed by 2.7pc and 6.3pc, respectively. Cement shares came in for major activity on reports of price increases by Rs25 per bag. In E&P, the 4.2pc attrition in oil prices saw the sector correcting by 0.2pc.

Activity picked up pace with the average daily traded volume up 8pc over the earlier week to 165m shares, despite the shortened trading week. Average traded value soared by 21pc to $48m mainly as high-valued stocks of government-sponsored companies attracted investors, who made anticipatory buying before the launch of market support fund. Leaders included: Bank of Punjab, 59.9m shares, Unity Foods 37.3m, Fauji Cement 32.8m and Maple Leaf Cement 30.6m shares.

The news flow was marked by Chinese Vice President’s visit to Pakistan and the country was ready to make foray into the $15bn Chinese meat market. A new petroleum policy was said to be on the cards under which auction of 40 new oil and gas blocks would begin in December.

Going forward, the upcoming week would be restricted to just one session ahead of the long Eid holidays. With budget FY20 scheduled for May 11, investors would focus on the expected taxation measures. Market gurus expect the budget to exert pressure on the market, but a simultaneous launch of market support funds could limit the damage and help maintain stability. Post-Eid period would also see the start of the results reason.

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