OUR STAFF REPORTER LAHORE The equity market continued to remain in dull mood ahead of central bank policy announcement. Average volumes dropped by 33 percent to 46 million, showing a low of 36-week while the index closed up 0.1 percent at 11,973 level. During outgoing week, foreigners stood as net buyers of $2.1 million, where as companies were net sellers of $2.9. Experts said that lacklustre performance was witnessed throughout the week as investors exercised caution ahead of the budget and more importantly, monetary policy announcement delayed for another week. However on the last day bullish activity was witnessed ahead of SBP policy announcement, hoping for favourable announcements on KSE proposals for reporting capital gain taxes by small investors and rise in tax credit for new listed firms in the federal budget. Moreover, market participants were left disappointed over outcome of IMF-Pak talks held in Dubai. News flows such as SNGPL again cutting gas supply to Engros new fertilizer plant, Planning Commission seeking for complete abolishment of deemed duty for refineries in the budget, and Pakistans weightage in MSCI Frontier Index being lowered to 3.98pc, were also key dampeners. Negotiations between the IMF and the government concluded during the week. While the mission welcomed recent fiscal austerity measures taken by the government as well as improving external account balance, it expressed concerns over rising inflation which has continued to pinch economic growth of the country. Moreover, the fund re-emphasised that implementation of the RGST remains paramount for limiting fiscal deficit to 4-4.5 percent. Among budgetary news flows, a 10 percent levy on natural gas was recommended this week. Sana Hanif, analyst with a brokerage house, said that C/A balance released for 10MFY11 showed a surplus of $748 million vs $3.5 billion in the same period last year, while foreign direct investment declined by 8.6 to $1.5 billion. Further, Rupee depreciated against $ to 85.6 from 84.96 last week. MTS investment (Mon-Thurs) stood at Rs155.9mn, whereas average rate stood at 15.91% compared to 15.90 percent last week. Ahsan Mehanti, analyst with Arif Habib Investments, said that investor remained bullish throughout the trading session led by commodity stocks on strong institutional and foreign interest in blue chip scrips despite concerns for rising circular debt in the energy sector. Budget leaks, on likely change in CGT implementation mode, leads to low volume recovery by the benchmark, in an otherwise a dull session. Renewed buying in dividend yielding stocks and speculative activity in various high priced stocks after initial setback, disallowed red numbers. Budget leaks suggesting high chances of acceptance of proposals, to change the implementation mode of CGT by the officials, did allow mainly the local participants to arrest low volume decline during early trade. Experts aid that the likely change proposed in CGT collection will result in increase in revenues from equity market activities besides providing the equity market desired depth. Moreover likely changes in collection mode of CGT will certainly allow the leverage participants to trade at improved capacity, despite a gloomy economic, financial and geo-political horizon. Volatility in relations with the US and unsettled political scene, along with stringent terms set by IMF for release of remaining tranches of fund, irking circular debt and rising external debt, will most likely restrict the upside.