Volatility witnessed

Karachi share market observed volatility during the last week ended on June 6, 2014. Although the federal budget FY15 offered mixed measures for the stock market, the sensitive law and order situation in the metropolitan city restricted market attempts to breach 30,000. The benchmark KSE-100 index closed at 29,509.11 points, down by 228.58 points compared to 29,737.69 points a week earlier.
"The market witnessed a highly volatile week where the Federal Budget FY15 offered mixed measures for the stock market, coupled with the weak law and order situation in the city," Samar Iqbal, a manager equity desk, Topline Securities.
During the last week, with 11 per cent rising average volumes reached 261 million shares and trading value rose by 19 per cent to Rs13 billion, she added.
"Along with the budget announcement, major news flows remained May Inflation of 8.34 per cent which came in line with expectations, while textile and auto stocks came in the limelight after the positive measures announced in the federal budget," she said.
The PTC rallied after the Finance Minister's announcement of land transfer to Etisalat. While, fertilizer stocks saw heavy battering after increase in gas cess. The UBL also remained under the pressure ahead of the Government's offering as concerns loom over floor price, Samar mentioned.
She informed that the book building of the UBL bank would remain the main event along with further clarity on budgetary measures including tax on dividend income and bonus shares.
Average daily value surged by 18.7 per cent to Rs 13.24 billion during the last week compared to Rs 11.14 billion a week earlier. Average daily volume also climbed to 261.378 million shares against 235.38 million shares during the previous week. Market capitalisation decreased by Rs 48.67 billion to Rs 6.994 trillion up from Rs 7.043 trillion.
"After the announcement of the FY15 budget on June 3, investors were in cautious mood as the budget was largely perceived as neutral for the Karachi Stock Exchange," said Furqan Ayub, an analyst at JS Global.
The budget did entail positives like reduction in corporate tax by 1 per cent to 33 per cent, 25 per cent YoY higher PSDP allocation that is positive for Cements and incentives for the textile sector, he said.
"On the other hand, certain tax measures; in particular increase in the duration of the holding period where the CGT is applicable and the inclusion of foreigners under the withholding tax regime disappointed the investors," he mentioned.
Although the market witnessed a recovery on the last trading session of the week, the end of the week benchmark KSE-100 index dipped 0.8 per cent WoW to close at 29,509, Furqan added.
Adnan Heidar research data analyst at Sherman Securities said that the budget uncertainty remain at the heat where investors switched from sectors which have negative implications in the budget. All in all no major excitement was seen in budget except for textile and agriculture, he added.
Law and order situation in Karachi is also other factor which kept investors on the sideline. Foreign investment continued with purchasing stocks worth $31.3 million (net buy) compared to $29.6 (net buy) last week, Heidar mentioned.
Karachi stock market on Monday closed at new height of 29,790 points gained 52.16 points. On Tuesday, bearish trend prevailed in share market and benchmark KSE-100 index shed 284.87 points to close at 29,504.98 points.
On Wednesday, Karachi share market stayed on negative note and KSE-100 lost 52.75 points to close at 29.452.23 points.
Karachi stock market on Thursday remained bearish and the benchmark KSE-100index declined by 35.03 points to close at 29,417.20 points.
On Friday, Karachi equity market posted positive trend and KSE-100 gained 92 points to close at 29,509.11 points. An analyst at BMA Capital said that the sensitive situation within the main metropolitan city of Karachi scuppered market attempts to breach 30,000.
Selling pressure is being seen in the market and focus next week needs to be on market behaviour around 29,700, which is forming as immediate resistance and 29,000 support, he added.