Bullish trend was witnessed at the Karachi share market during the outgoing week ended January 20, 2012 on the back of investors' expectation over the positive outcome on capital gains tax issue. The benchmark KSE-100 index registered healthy gains of 760.22 points to close at 11,774.68 level.
Trading activities improved significantly and the average daily volumes at the ready counter increased by massive 208.8 percent to 86.88 million shares as compared to previous week's average of 28.13 million shares.
Total market capitalisation increased by Rs 190 billion on week-on-week basis to Rs 3.056 trillion. The foreign investors, however remained net sellers and withdrew $3.7 million during the week as compared to an inflow of $0.18 million previous week.
The market opened on a positive note on Monday and the index increased by 98.19 points to close at 11,112.65 points with total volume of 26.681 million shares. This trend continued on Tuesday and the index gained another 192.51 points to close at 11,305.16 points with 53.112 million shares.
The market witnessed a bullish session on Wednesday and the index surged by 242.56 points to close at 11,547.72 points with 83.732 million shares.
On Thursday, the investors opted for profit taking and the index lost 32.13 points to close at 11,515.59 points with 92.473 million shares.
The index registered another massive increase of 259.09 points and closed the week at 11,774.68 points with 178.424 million shares.
"After a long of time, KSE-100 index seemed to have a real bullish feel where index gained a massive 760 points during the week", Yawar Uz Zaman, an analyst at InvestCap said.
"Despite prevailing political tensions, market looked immune to any political hazard and rallied towards 12,000 points mark", he said adding that the core reasons behind such upbeat activities was firstly SECP's proposal to FBR to take certain steps in favour of the corporate sector and the capital markets (easier CGT filing mechanism with reduction in corporate tax rate) to improve trading activities at equity market.
The government effort to resolve the lingering issue of circular debt through another TFC issue of Rs 150 billion was also taken up positively at the bourse. Meanwhile, the undying political tensions also put their heads down, which further provided support to the market.
During the week, US council general visited KSE and showed his eagerness to enhance investment in Pakistan.
The finance minister was also scheduled to visit KSE to discuss equity market issues and is expected to announce much-needed incentives to the market. Later he visited the KSE on Saturday and announced approval of all SECP proposals including tax amnesty for the capital market players.
Naveed Tehsin at JS Global Capital said that the index rallied 6.9 percent during the week, highest since April 03, 2009 (146 week high).
The investors' interest is also vindicated by 209 percent improvement in average volumes to 87 million shares.
The positive expectations related to Capital Gain Tax (CGT) issue ruled the market sentiment, while continuing global economic crisis and uncertain domestic political environment failed to dampen the investor confidence. Moreover, the circular debt adjustment worth Rs 150 billion through issuance of Term Finance Certificates (TFCs) and the raid by Competition Commission of Pakistan (CCP) at All Pakistan Cement Manufacturers Association (APCMA) office were the major highlights of the week.
The bulls linked with CGT.
The news regarding the proposals sent by SECP to the Ministry of Finance pertaining to CGT, WHT and disclosure of the source of income created positive investor sentiment.
Moreover, the announcement in the KSE regarding the visit of the Finance Minister Dr Abdul Hafeez Sheikh on the last trading day also provided impetus to the market, as he is expected to announce some major changes to the CGT regime.
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