PSX Daily Market Review - 28th May 2019

Trading volume at PSX floor dropped by 16.81 million shares or 11.83% on DoD basis, whereas the benchmark KSE100 index opened at 35,818.33, posted a day high of 35,892.29 and a day low of 35,610.41 points during last trading session while session suspended at 35,697.37 with net change of -6.44 points and net trading volume of 94.51 million shares. Daily trading volume of KSE100 listed companies dropped by 15.91 million shares or 14.41% on DoD basis.
Foreign Investors remained in net selling positions of 1.82 million shares but net value of Foreign inflow increased by 1.56 million US Dollars. Categorically, Foreign Corporate investors remained in net buying positions of 2.49 million shares but Overseas Pakistanis remained in net selling positions of 4.31 million shares. While on the other side Local Individuals and Insurance Companies remained in net buying positions of 10.68 and 3.5 million shares but Local Companies, Banks, Mutual Funds and Brokers remained in net selling positions of 12.08, 0.42, 0.02 and 0.07 million shares respectively.

Asian equities buoyed by China, auto merger but gains capped
Asian shares edged up on Tuesday lifted by gains in China and as auto firms climbed on merger news, but broad uncertainties over trade and economic growth kept a lid on gains. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.31%, and U.S. S&P 500 e-mini futures rose 0.19% to 2,837.25. Chinese blue-chips rose 1.02% a day after data showed Chinese industrial firms’ profits shrank in April, which is expected to prompt more government stimulus to support the slowing economy. A planned increase in the weighting of Chinese A-shares in MSCI indexes after the market close later on Tuesday also boosted shares.Seoul’s KOSPI added 0.13%, while Australian shares were up 0.45%. Japan’s Nikkei stock index gained 0.39%.
Provincial govts record budget surplus of Rs291.6b in nine months
The four provincial governments recorded budget surplus of Rs291.6 billion during nine months (July to March) of the ongoing fiscal year that helped in restricting the country’s budget deficit at Rs1.9 trillion. The expenditures of four provinces had remained at Rs1.91 trillion as compared to the revenues of Rs2.2 trillion, making the surplus of Rs291.6 billion in nine months. The provincial surplus budgets had helped in restricting the country’s budget deficit at Rs1.9 trillion. Otherwise, the budget deficit would have further widened if provinces had not recorded surplus budgets. The government had budgeted provinces to give budget surplus of Rs285.6 billion during entire current fiscal year. According to the figures of ministry of finance, apart from Sindh, other three provinces had failed to enhance their tax collection during nine months of the year 2018-19. The tax collection of four provinces was recorded at Rs290.4b during July to March of the ongoing fiscal year as against Rs280b of the corresponding period of previous year, showing growth of only 3.7pc. The increase in percentage in provincial tax collection is due to 6.2 percent growth in tax collection of Sindh province. Growth in tax collection in other three provinces is negligible.
Sindh for increasing FED on gas to Rs18 per MMBTU
Sindh has demanded to increase of federal excise duty (FED) on natural gas by 80 percent from the existing Rs 10 per MMBTU to Rs 18 per MMBTU and impose 5 percent duty on crude oil. Freezing of FED rate for natural gas at Rs 10 per MMBTU and non-imposition of FED on crude oil has been badly affecting provincial revenue resources and it is therefore requested to add the increase rate of FED on gas and crude oil in the next budget 2019-20, Chief Minister Sindh Murad Ali Shah said in a letter to Abdul Hafeez Shaikh, advisor to the Prime Minister on Finance, Revenue and Economic Affairs. According to the letter, available with The Nation, Chief Minister Sindh said that the rate of federal duty of excise on natural gas was last fixed at Rs 10 per MMBTU through finance act. There is no change in the rate since then, despite the fact that the real value of Rs 2010 has reduced, in terms of year 2019 to around Rs 5. Moreover, had the rate been linked with the CPU then it would have been over Rs 18 per MMBTU today.
FBR looks to regulatory duties in ambitious revenue plan for 2019-20
The government is planning to increase regulatory duties on hundreds of products from existing two per cent to 3pc in order to discourage imports of non-essential commodities as part of the move to control the widening current account deficit, according to the revenue proposal plan available with Dawn. The plan aims to build on and continue regulatory duties impo­sed by the previous government on imports of almost 1,900 items. On top of that, the government is also evaluating a revenue plan to impose duty on import of new items and withdrawal of exemptions on certain sectors from the next budget to raise additional revenue. According to the customs’ revenue plan and senior officers of the Federal Board of Revenue (FBR), the proposed revenue measures will be considered and finalised in the next few weeks.
PM to launch Qarz-i-Hasna, asset transfer schemes next month
The government will start next month the process of distributing over 80,000 loans and moveable/immovable assets every month to the deserving families under Qarz-i-Hasna and assets transfer schemes. Both schemes will be launched by Prime Minister Imran Khan under the ambitious Ehsaas programme. According to the Prime Minister Office, under the Ehsaas Qarz-i-Hasna scheme, over 80,000 loans will be disbursed every month among youth and women, enabling them to undertake their own business ventures and help their families extricate from poverty trap. These loans would be prioritised in the underdeveloped districts.

The Benchmark KSE100 Index is being capped by a resistant trend line at 35,800 points while a horizontal resistant region would try to cap current bullish rally at 36,086 points. Daily and weekly momentum indicators are in bullish mode while hourly momentum indicators have reached oversold region and these would try to push index downward for an intraday correction therefore it's expected that index may would try to slip for an intraday correction and in that case 35,500 and 35,250 would resist against any kind of bearish pressure. It's recommended to stay cautious and post strict trailing stop loss on existing long positions while to initiate new positions it's recommended to wait for a dip. On short term basis index have formatted a bullish engulfing pattern on weekly chart which would try push index towards 37,000 & 37,500 points in coming days.