“KSE would go up on the back of likely strong earnings to be announced by blue chip banks and fertiliser makers,” said Faisal Rajab Ali, a broker at KSE, adding that issuance of SRO to materialise relaxations announced by finance minister last week in capital gains tax (CGT) regime would help KSE move up on fast track.
The benchmark KSE 100-share index increased by 185.54 points, or 2.83 percent, during the week ended on January 27 and stood at 11,960.22 points. The index went beyond 12,000 points level many times during the week and sustained once as well after stakeholders’ desired amendments announced in CGT regime. But delay on issuance of such SRO convinced investors to book profits and trim positions.
Ali foresaw the market sustaining above 12,000 points next week with improved volumes. “Investors would gradually stage come back on much awaited amendments announced in CGT regime, as they had invested such funds in other instruments.”
Saqib Hussain, Head of Sales and Marketing at MM Securities, said that the relaxation of not inquiring about the source of funds to be invested in shares by June 2014 would indeed pave the way for comeback of investors to local bourses. “Issuance of SRO on relaxing rules for CGT is awaited vehemently.”
Freeze of CGT’s rate at current levels and abolition of withholding tax on brokers’ income would be additional incentives to re-attract the gone investors.
Apart from this, the availability of Rs50 million additional funds to each broker would help re-inviting those investors, including foreigner, who want to buy stocks beyond their financial limits, he said.
Both the experts, however, did not give significant importance to the political development that may take place after resumption of prime minister’s show case note in National Reconciliation Ordinance (NRO) case at Supreme Court (SC) next week.
Ali said “Hearings at SC are not going to change the destiny of KSE unless the Court announces a radical decision in any of the cases.”
Hussain said “Cases of memo and NRO at SC have become weak after Mansoor Ijaz refused to appear in the court and President Zardari is believed to enjoy immunity, respectively.”
An analyst at KASB Securities said that while the market awaited some of the finer details of the CGT relief package, the limelight was likely to be taken over by the results season. However the market will have an eye out for the CPI number for January as it will help shape market expectations on path of discount rate.
“Political noise which took a relative breather this week will make a comeback as the Supreme Court resumes hearing on the contempt of court proceedings against the Prime Minister.”
During last week, average daily volumes jumped up by 67 percent to 145 million shares. The market capitalisation improved by Rs49 billion to Rs3,105 billion.
Foreign portfolio investors again appear as net buyers of shares worth $7.38 million shares last week, according to National Clearing Company of Pakistan Limited.
Furqan Ayub, an analyst at JS Global, said that the market entered a consolidation phase last week following the massive surge in the prior week.
Positive expectations of changes in the modalities of Capital Gain Tax (CGT) were finally realised after Dr Hafeez Sheikh’s visit to the Karachi Stock Exchange (KSE) last weekend, he said.
Further interest in the market also came with the commencement of the result season, he added. For the latest updates on the stock market, visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today
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