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PSX keeps veering, commences week on negative note

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KARACHI – The market kept veering up and down during the outgoing week owing to multiple question marks on economic and political fronts.

The benchmark index (PSX-100) kicked off the week on a negative note; however, buying frenzy in the later half helped the index salvage pride and close the week on a positive change, gaining 65 points.

In contrast to local investors, offshore participants remained on the selling side given continuing long-awaited clarity on the economic front. Foreigners sold $26.1 million worth of shares during the week vs. net selling of $9.9 million last week.

On a local front, insurance companies and mutual funds were net buyers amounting to $11.8 million and $10.6 million, respectively. The key highlight of the week turned out to be the ongoing chatter regarding upcoming ‘mini-budget’ aimed at elevating the government’s revenue while also cutting down expenses at the same time.

It is proposed to jack up the tax revenue by Rs100-125 billion through the imposition of additional custom and regulatory duty while trimming the PSDP allocation by whopping Rs330-430 billion.

The on-going rumours regarding textile relief package (focused on lowering power tariff for textile companies) helped the overall sector conclude the week on a positive note. In contrast, cement and steel stocks came under the hammer upon an anticipated cut down in PSDP allocation in the upcoming budget revision.

Likewise, automobile assemblers succumbed to selling spree owing to subdued sales in the preceding month. The market is expected to remain muted until the formal revision in the Finance Bill.

Should the circulating rumours materialize; analysts foresee considerable pressure on the index as additional taxes would jack up the input cost of doing business. Thereby, investors are urged to wait and watch, while keeping spare cash to avail the price discounts that may be in the offing.

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