Stock market recovers on end of VAT dispute

Karachi’s stock market remained bullish throughout Wednesday’s session due to the Federal Government and Sindh solving their VAT dispute which improved market sentiments.

The KSE-100 had been badly affected by the VAT, fears of steps to be taken in the forthcoming budget  and the European debt crisis, according to analysts. It had been closing in the negative for the past few trading sessions.

However, the benchmark KSE-100 index gained 204.88 points, or 2.2 per cent, to 9,499 points.

There were rumours that the Securities & Exchange Commission of Pakistan (SECP) would introduce margin financing and that the Federal Board of Revenue could ease Capital Gains Tax collecting procedure.

Bargain hunters picked up Pakistani stocks especially in the banking sector, at bargain prices, driving prices up by 2.2 percent at Wednesday’s close. This helped the market recover from its previous trading session’s close, which was the KSE’s lowest during the year.

Turnover rose to 114 million shares, as compared with 94.12 million shares traded on Tuesday.

Today’s rally was broad based where and almost all of the blue chip stocks closed in the green. MCB Bank, Attock Refinery, JS & Company, Arif Habib Securities, D G Khan Cement, Nishat Mills and Engro closed on their upper circuit breaker.

“Rumours regarding the approval of margin financing also acted as catalyst in this bullish momentum” said Topline Securities analyst Furqan Punjani.

“The last two session’s losses were covered possibly owing to the fact market had fallen in excess of 10% since May. ” said analyst at Elixir Securities, Faisal Bilwani. He added that at one point there was even a rumour, which he believes to be untrue, about CGT tax payers being exempted from a National tax Number, which would shield retail investors from income tax officers.

Out of the 400 stocks which were traded during the day, 312 were up, 77 were down. The price of 11 stocks remained unchanged.

The National Bank of Pakistan ended 4.35 percent higher at 64.76 rupees.

Pakistan Oil Field (POL) was the only blue chip to close in red due to speculations that production from the Maramzai field could be delayed, according to JS Global analyst Muzammil Mussani.

Published in the Express Tribune, June 3^rd, 2010.