Analysts are optimistic about the Karachi Stock Exchange (KSE) maintaining its positive momentum in the coming week, buoyed by a surge in foreign investments.
According to analysts at Arif Habib Limited, the local equity bourse is expected to continue its upward trajectory on the back of improved foreign inflows.
“We expect the foreigners to remain net buyers during the next week as well,” stated analysts at Arif Habib Limited, highlighting the positive sentiment surrounding the market.
The benchmark KSE-100 index experienced a noteworthy acceleration, gaining 958 points during the outgoing week and settling at 40,265 points, translating to a significant week-on-week return of 2.44 percent. Analysts attribute this surge to an influx of foreign investments and positive market sentiment following the announcement of the government’s economic reforms package.
The Finance Supplementary (Second Amendment) Bill, 2019 played a pivotal role in shaping investor confidence. The legislation focused on enhancing the ease of doing business, providing incentives for export-oriented and industrial sectors, and eliminating obstacles to domestic growth.
A particularly notable development was the acceptance of a key demand from the stock market to abolish the 0.02 percent advance tax. Additionally, the government’s decision to permit the carry-forward of capital losses for three years had a positive impact on investor sentiment.
Several other measures, including the abolition of super tax for non-banking companies and the elimination of withholding tax for filers on banking transactions, contributed to an overall improvement in confidence within the equity bourse.
Commercial Banks led the positive contributions to the index with an increase of 559 points, followed by Oil & Gas Exploration Companies (133 points), Fertilizers (97 points), Automobile Assemblers (66 points), and Power Generation and Distribution (66 points). Conversely, Oil and Gas Marketing Companies (-24 points) and Insurance (-15 points) experienced downward pressure.
Top contributors to the index included HBL (232 points), UBL (142 points), MCB (79 points), PPL (76 points), and HUBC (61 points).
Foreign investors played a significant role in boosting the market’s performance, accumulating $17 million in investments during the week. This marked a notable turnaround from the previous week when there was a net sell-off of $9.4 million.
Analysts also noted that the likelihood of an unchanged discount rate announcement in the upcoming monetary policy is expected to sustain the positive momentum in the market. As the Karachi Stock Exchange continues to attract foreign investments and the government’s economic reforms gain traction, the outlook remains optimistic for investors in the coming week.