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Karachi stock exchange-100 index lost 4082 points

Pakistan stock market saw a negative week as Karachi stock exchange-100 index lost 4082 points during the week.The political uncertainty , and heavy investor selling were two major factors affecting the  Pakistan stock market. The index saw a deadliest week since February 2009.It was one of the deadliest week in the Karachi stock exchange 100 index history. The panic selling was mainly caused by  different taxes imposed on capital gains by the government in  Federal budget 2017-18. Foreign investors showed considerable interest in the market after MSCI inclusion but still there was a net outflow during the week. Foreign investors sold net equities of about $149.5 million during the week.

Karachi stock exchange-100 index started the week at 52636  points and ended the week at 48555 points . The weekly share trading volume showed an increase  as compared to the last week’s share trading volume .

Pakistan stock market started the week on a negative note as investor’s sentiment was badly hurt by the taxation policies of the government.Government imposed flat Capital Gain Tax (CGT) rate across all holding periods, higher tax rates on dividends  and mutual funds. The Karachi stock exchange-100 index lost 1810 points on Thursday which is one of the greatest fall in a single day of the week.

Worst Performers of the Week

Banking sector was the worst performing sector of the week. HBL, UBL and MCB were badly affected by the declining stock market. These shares declined collectively by 13-14% and they added  1,154 negative points in the Karachi stock exchange-100 index .Moreover,exploration and production sector was also badly affected by the declining stock market. It declined by  9.4% during the week. OGDCL and PPL were also declined by 11.4%  and 9.4%  respectively.These two stocks collectively took away 436 points from the Karachi stock exchange-100 index .

Future Outlook

Market analysts are expecting a  mixed sentiment in the next week as investors will remain cautious after  seeing a deadly last week at the Pakistan stock market. Moreover,political uncertainty and international oil prices fluctuations can affect the investing behaviors at the Pakistan stock market.

JIT  is currently conducting an inquiry from the family of the prime minister Pakistan.The investigation is in its final phases and JIT may submit its report in next week. PML-N government recently started a tussle with the judiciary and that is creating political uncertainty. Most of the legal experts agree on this point that disqualification of the Prime Minister is certain after final JIT report.Disqualification of the Prime minister will create instability  in the country and that is very good time for value investors to invest. So,value investors can surely invest in the undervalued stocks to improve their long run returns.

According to the market analysts federal budget for fiscal year 2017-18 was huge disappointment for the stock market investors .They believe that  finance ministry totally ignored the recommendations of the investors and business community. Moreover,they imposed cash dividends and capital gains related taxes . Market analysts also believe that taxes imposed in the federal budget will check the further growth of the stock market. Therefore,buy and hold strategy is best for the stock market investors in the present circumstances.

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About Emaad Qureshi