KARACHI: Stocks ended higher on Tuesday but off the day’s high, as cautious investors bought cheaper shares after a 2.5 per cent market drop the previous day, dealers said.
Investors were also hopeful of a positive outcome in an upcoming meeting on Wednesday between the Karachi Stock Exchange (KSE) authorities and the National Assembely (NA) Standing Committee on Finance regarding a capital gains tax (CGT), said Asad Iqbal, Chief Investment Officer at Faysal Asset Management.
The KSE benchmark 100-share index rose 0.23 per cent, or 20.95 points, to end at 9,250.55. The KSE-index hit an intra-day high of 9,370.36 points. The KSE-index fell 2.55 per cent on Monday.
In its budget for the 2010/11 fiscal year, the government announced that a capital gains tax of 10 per cent would be imposed on stocks held for six months or less and 7.5 per cent on stocks held between 6 months to a year.
Dealers said the government had previously agreed with the stock market that the capital gains tax would be levied from the start of the 2010/11 fiscal year on July 1.
But now there are concerns that the government may seek to tax gains made before that date as well, they said.
Another disagreement was on the filing of returns for the new tax. Stockbrokers say they need to be filed annually, but the budget states that brokerage houses must submit quarterly returns.
“The market remains confused over future direction as after a positive open, the spark soon fizzled out in absence of any concrete positive news to sustain the upside in a bear market, said Elixir Securities’ analyst, Sara Shahid. According to her the market went down after a good start due to the absence of any concrete positive news to sustain the upside in a bear market.
Investors are waiting for the results of the KSE and Senate committee meeting on Wednesday evening. Dealers remain hopefull about the meeting between the KSE and President Zardari over the weekend which could possibly lead to some positives for capital markets.
Tuesday’s turnover was 82.9 million shares, compared with 89.1 million shares traded on Monday. The total exchange value stood at Rs2.63 billion.
During the day’s trade 209 stocks closed higher, a 175 declined and 22 remained unchanged in value.
HUB Power Company closed 4 per cent lower because the stock was removed from the list of Shariah Complaint stocks. Shahid says that the scrip underwent selling reportedly from Islamic funds and local banks.
Lotte Pakistan (KSE: LOTPTA) was the volume leader with 12 million shares losing Rs0.12 to end at Rs8.61. It was the volume leader yesterday as well with 12.23 million shares losing Rs0.59 to close at Rs8.73.
Hub Power Company came second with 10.6 million shares losing Rs1.41 to end at Rs30.74.
Published in the Express Tribune, June 16th, 2010.
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