Stock Watch.

Stocks gain 958 points on positive sentiments of mini-budget

Summary

The positive news flow which started coming last week about higher expectation from the mini-budget to be presented on 23rd January kept market bullish. On last Friday Jan-18 market gained 62.61 points after two days declining index and closed 39,306.50. It was bullish throughout this week finally settling this Friday on profit taking, losing 24.38 points. It closed above 40,000 level to 40,264.75.

The so called mini-budget can best be described as revision in budgetary targets, a fiscal correction reflection of ease of doing business. It was well received by stock brokers, as it offers them some major concessions.

The abolishment of 0.02 pc advance tax would help reduce the cost of doing business and encourage the day traders which will eventually increase market volume. The abolishment of withholding tax on members of stock exchange in lieu of their commission would reduce the documentation hassle. Another main relief proposed is the permission to carry forward losses sustained in a year upto subsequent three years. The reduction of tax on inter corporate dividend in case of companies will provide them relief.

Stock Exchange trading on Monday started on high mini-budget expectation with capital market friendly measures. The market gained 237.27 points to close on 39,543.77. The rally was led by EandP, banking, auto, fertilizer and power sector which contributed 316 points. The volume, however, declined to 124m from 155m last Friday,

The investors seems to have developed position sentiments on Mini-Budget day Tuesday January 23 on the promises of Finance Minister. The KSE-100 Index gained 358.44 points. The volume too jumped to 137m. The KSE-100 Index seems to test 40,000 level as it closed 39,902.21. The market capitalization broke to Rs.8 trillion since November 30 2018. It closed at Rs.8,015m on Tuesday Jan.22

The KSE-100 index broke 40,000 barrier on Wednesday adding 155.64 points to close at 40,057.85. The SBP signed $3 billion agreement with Abu Dhabi Fund for Development to be deposited in SBP account. The volume increased to 179m.

The market continued to be in positive mode on Thursday as further positive measures were highlighted to investors about supplementary budget presented. Budgetary concession to banks for lending to housing sector lifted the cement stocks which contributed 50 points in the rise of 231.31 points. The KSE-100 index closed at 40,289.16. The...