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Budget fails to impress stock market

By Our Equities Correspondent 2014-06-05
KARACHI: The stock market was generally unimpressed by the budget as it opened on the first day following its announcement (for the first time on a working day).

The benchmark KSE-100 index moved in a wide band of 321 points, on Wednesday, which provided trading opportunity to punters and day traders. The index finally closed down by 52.75 points at 29,452.23.

The investors` reluctance to make fresh purchases was also due to the volatile law and order situation in the city.

The salient feature of the day was the traders` scramble to lap up the textile stocks, which resulted in almost all active textile scrips hitting their `upper circuit`.Investors were buoyed by the incentives in the budget to boost export growth andreduction of 2pc in Export Refinance Facility to 7.5pc from 9.4pc. Foreign inflowscontinued on Wednesday with overseas investors purchasing stocks worth $7.14m,of which $2.5m were invested in the oil & gas sector and $2.3m in the cements.Among local participants, individuals went on a buying spree with net investment of $7.49m, while institutional investors booked profit.

Analyst Fahad M. Ali termed the first trading session post budget as evidencing mixed sentiments.

Power sector remained under pressure as the budget proposes to reduce subsidy by Rs124bn to Rs185bn.

Decision of increase in CGT to 12.5pc instead of 17.5pc was sentiment booster. However the government decided to impose 5pc tax on bonus issues, which did not find favour with investors.

Stock strategist Samar Iqbal commented that due to a mixed budget and city situation, market remained range-bound. Regardless of positive measures for auto assemblers, profit taking was seen in the sector due to weak sentiments.