Weekly Review: Equity market’s sentiments high on abolishing of advance tax

Weekly Review: Equity market’s sentiments high on abolishing of advance tax

The equity market’s sentiments are high due to commitment of the prime minister for abolishing the advance tax for stock market.

The Pakistan Stock Exchange (PSX) experienced an exceptional surge, closing on a remarkably positive note with the benchmark KSE-100 index recording a significant increase of 4.0 percent week-on-week (WoW). The market closed at 39,049 points, marking the second-highest weekly gain observed in the past twelve months, largely driven by the abolishment of advance tax.

Analysts at Arif Habib Limited identified several factors contributing to the market’s bullish trend. Among them, the anticipated visit of Saudi Arabia’s energy minister to Pakistan raised expectations of the establishment of the largest oil refinery in the country, promising a substantial boost to the energy sector. Additionally, commitments made by the Prime Minister during his visit to the stock exchange, including the abolition of advance tax and the allowance of carrying forward capital losses, were seen as positive indicators for investors.

The week commenced on a strong note, with the market surging over 1,000 points on Monday, driven by the announcement of a $3 billion financial support package from the Crown Prince of the United Arab Emirates (UAE). The UAE’s commitment to provide a $3 billion oil facility further fueled market confidence.

Institutional support played a pivotal role in the market’s growth, as the Financial Action Task Force (FATF) expressed positive remarks about Pakistan’s efforts to combat money laundering and terror financing.

The rise in international oil prices, combined with attractive valuations, enticed investors to build positions in the Exploration and Production (E&P) sector. The positive momentum extended across various sectors, with significant contributions from Oil and Gas Exploration, Commercial Banks, Fertilizers, Oil and Gas Marketing, and Cements.

Notable gainers among individual stocks included Pakistan Petroleum Limited (PPL), Oil and Gas Development Company Limited (OGDC), Pakistan Oilfields Limited (POL), Fauji Fertilizer Company (FFC), and Habib Bank Limited (HBL).

Despite the overall positive sentiment, a few sectors made negative contributions to the index, including Tobacco, Miscellaneous, and Chemical.

Foreign investors showed renewed interest in the PSX, accumulating stocks worth $0.6 million during the week. On the local front, Mutual Funds led the bullish sentiments with significant buying at the index worth $6.7 million, followed by Broker Proprietary at $6.4 million.

The week also witnessed a notable increase in average daily trading volumes, up by 18 percent to 139 million shares, with the value traded jumping by 12 percent to reach $46 million.

Beyond the stock market performance, the week saw several other significant developments, including a $3 billion financial assistance agreement following the meeting between the Abu Dhabi Crown Prince and Prime Minister Imran Khan, a 5 percent reduction in the trade deficit during the first half of FY19, and positive assessments by FATF officials regarding Pakistan’s anti-money laundering efforts. The State Bank of Pakistan’s reserves experienced a 3.28 percent decline, settling at $7.05 billion, while remittances increased by 10 percent to $10.7 billion in the first half of FY19. Moreover, operational furnace oil-based power plants contributed to the country’s energy sector.

The impressive performance of the PSX reflects the market’s response to these positive events and its resilience amid global economic challenges. As investors continue to monitor developments, both locally and internationally, the Pakistani stock market remains an attractive destination for investment.