Stock Review.

• Author: Kazmi, Shabbir

Byline: Shabbir Kazmi

Market witnessed positive trend, euphoria of mini budget to continue

Stock market opened the week positive in anticipation of a successful visit of Prime Minister Imran Khan to Qatar while the unveiling of much-awaited 'mini budget' during the week kept the momentum positive. Investors' sentiments were reflected in the stock market's performance as the bourse closed the week ended 25th January 2019 at 40,265 points, up 2.44%WoW. Average daily volume increased by 44%WoW to 168 million shares, while net foreign buying of US$17 million during the week also supported the index.

Additional news flows moving the market included: 1) State Bank of Pakistan (SBP) receiving US$ one billion from the UAE following an agreement with the Abu Dhabi Fund for Development (ADFD) in Abu Dhabi, 2) cabinet approving Gas Infrastructure Development Cess settlement mechanism, 3) IMF revising GDP growth projections downwards to three percent for the current fiscal and in the subsequent years and 4) the foreign currency reserves held by the SBP earlier falling by USD$265 million to US$6.6 billion.

Gainers at the bourse included: PSMC, HBL, UBL, MCB and PPL, whereas laggards were: APL, GWLC, EFERT, PIOC and FATIMA. Volume leaders during the week were: BOP, KEL, PIBTL and TRG. With the rollover week ending, analysts expect market to continue its journey north-driven by the euphoria over mini budget. Also, clarity on GIDC issue is expected to emerge next week which can significantly affect sectors like fertilizer and textiles. However, analysts still attach longer term direction to clarity regarding IMF bailout package. Moreover, the result season is upon us where bigwigs like LUCK are expected to announce their result along with other companies like EPCL and BAHL.

Amidst a divisive macro outlook and heady budgetary imbalances, the PTI-led government introduced its second finance bill to a revengeful opposition, while alluding to approaching the IMF for the 'final time', something Finance Minister, Asad Umar and Prime Minister Imran Khan have vowed to uphold market dynamics are expected to get a lift from 1) abolishment of 0.02% WHT on share transactions, 2) capital loss carryover to be available for three years, 3) abolishment of tax on undistributed profits and 4) abolishment of super tax in FY20 on non-banking companies.

From a sector wise perspective, proposals in the budget can be seen to favor SMEs (concessionary tax on loans), Automobile...