Weekly review: Market bucks tradition ahead of budget

The week before the budget is historically thinly traded as investors step away but this time with the rupee plummeting to new lows and varied news flow on the budget, the value of shares traded traded rose up a notch.

The week started on a positive note but slipped mid week and closed down 0.35% on a weekly basis.

Volumes did drop a modest 10% to 141 million shares but the value of the traded shares was jacked up 6% to $58 million per day on a weekly basis. The benchmark 100-share index fell 0.3% to close at the 13,877 point level.

The trend in foreign activity also added to the volatility as it registered alternate days of inflows and outflow before ending the week with a marginal outflow $92,000 compared with a $12 million inflow last week.

On the macro front, the currency was in the limelight due to its massive depreciation as it hit new lows for five consecutive during the week. The rupee lost 2% of its value against the dollar on a weekly basis.

The cause of the rupee was not helped by Wall Street Jounral publishing a very grim outlook for Pakistan economy and linking it to an interview with Central Bank’s Governor Yaseen Anwar, which the Governor subsequently clarified as an incomplete reflection of his interview, says a KASB Securities research note.

Furthermore, rumours regarding the hike in gas development surcharge kept investors interested in the fertiliser sector, while a cut in federal excise duty on cements in the budget caused a stir of activity in the construction and material sectors.

Both reports came out to be true as the government imposed an additional gas cess, a type of tax, of Rs100 per mmbtu on feed gas while Rs87 per mmbtu on fuel gas in the budget while FED on cement was cut down by Rs100 per ton to Rs400 per ton.

The next monetary policy is due in mid-June and given the conflicting political and economic considerations, will be keenly tracked, says the research note. The direction in early June, however, will be set by the key takeaways of the budget.

Monday, May 28
The stock market kicked off the final week of May on a positive note, with foreign inflows and institutional activity guiding investor sentiment to help restore the market to levels above the 14,000 points psychological barrier.

Tuesday, May 29
The Karachi stock market witnessed a mixed trading session. The bourse closed with clipped gains after an early rally saw investors cash in at higher levels.

Wednesday, May 30
The Karachi stock market closed deep in the red, as rumours regarding the rejection of an increase in the Gas Infrastructure Development Cess – which had led to hurried buying in fertiliser scrips yesterday – proved unfounded.

Thursday, May 31
The stock market witnessed another bout of profit-taking amid shrinking volumes ahead of the federal budget announcement due Friday.

Friday, June 01
With May safely behind, the stock market stepped into June on a positive note, led by the oil and cement sectors and improving sentiment.

Published in The Express Tribune, June 3rd, 2012.