Bullish trend was witnessed at Karachi share market during the week on May 28, 2011 on expectations of some tax incentives for capital market in the coming budget for 2011-12, to be announced on June 3, 2011. The market witnessed positive trend throughout the week and the KSE-100 index registered a gain of 252.14 points to close at 12,225.52 points.
Due to active participation of local retail investors, trading improved tremendously and the average daily volume at ready counter increased to 82.89 million shares, or 80.6 percent, as compared to previous week's 45.90 million shares.
Market capitalisation increased by Rs 67 billion to Rs 3.241 trillion. Foreign investors emerged net buyers as a fresh inflow of $1.67 million was recorded.
On Monday, the market opened on a positive note and the index surged by 57.26 points to close at 12,030.64 points with volume of 40.278 million shares.
On Tuesday, the index gained 99.94 points to close at 12,130.58 points with 70.111 million shares.
On Wednesday, the index registered an increase of 37.54 points and closed at 12,168.12 points with 122.922 million shares.
On Thursday, the index inched up by 30.00 points and closed at 12,198.12 points with 101.515 million shares.
On Friday, investors' interest continued and the index gained 27.40 points and closed at 12,225.52 points with 79.641 million shares.
"After posting a few range-bound sessions, the KSE-100 index breached the psychological level of 12,000 points once again during the week and closed significantly higher on the last trading day of the week", Yawar Uz Zaman, an analyst at Invest Capital and Securities said.
He said the foremost reason behind such escalating market gains with improved activity was the hope of "market/investor friendly" budget for FY12 that is expected to be announced on June 3, 2011, where the government is expected to provide tax incentives on new listings, room for small investors with few tax exemptions and/or replace capital gains tax with other more acceptable taxes on trading.
The euphoria in the market was injected following a series of meetings between market stakeholders and the President of the country alongside the Finance Minister, who were reported to have agreed to revisit the current market levies to promote small investors.
Rabia Tariq at JS Global Capital said that the market was engulfed in budget-related news during the week, with particular interest witnessed in the refinery sector. Rumours that the government might maintain the deemed duty at 7.5 percent on HSD, instead of a cut anticipated earlier, led to a rally in refinery stocks. Further, ADB pledged $200 million for budgetary support along with $4.5 billion for the construction of Diamer-Bhasha Dam strengthened investor interest. Overall, the market sentiment improved after a meeting between President Zardari and Pakistan Business Council (PBC) in which revival of withholding tax, instead of the current CGT, was recommended.
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