KARACHI: Stocks ended higher on Tuesday, but lower than the intraday high, in anticipation of a positive outcome of a meeting between the Karachi Stock Exchange authorities and the market’s regulator.
The KSE authorities and the Securities and Exchange Commission of Pakistan (SECP) met to discuss leverage products for the market. They decided to form a committee which will be required to submit recommendations within 15 working days, according to the SECP.
The KSE-100 index rose 31.01 points, or 0.32 per cent, to end at 9,682.32. The index hit its intra-day high at 9,786.06 points. Volume was 83.21 million shares, compared with 66.95 million shares traded on Monday. The value of the shares traded was Rs3.49 billion.
“The market remained in the green throughout the day as the SECP and the KSE discussed re-introduction of a leverage product. Index made an intraday high of 9,786 points. However, after the announcement that a committee of different stakeholders will review various leverage products the market came down,” said JS Global Capital analyst, Muzzamil Mussani.
There was no substantial news after the meeting, and the volume decreased towards the later part of the day, but the market managed to close marginally up, said analysts.
“The market opened on a positive note amid hope of positive outcome from the meeting between the KSE and SECP. However, decision to form a committee to evaluate different margin products resulted in profit-taking by investors. Volumes remained depressed on year-end concerns,” said Topline Securities’ analyst, Furqan Punjani.
On a side note, the MSCI announced that Pakistan market will not be considered for reinclusion into the emerging market category this year with a review not being held before 2011.
“Talk of foreign buying in the NBP, PTC and Engro and rumours of higher allocation for these names and the PSO in a basket of stocks in the upcoming leverage product kept the momentum strong. However, profit-taking in a directionless market pulled the index to close with only marginal gains,” said Elixir Securities analyst Faisal Bilwany.
He added that they expect stocks to remain order-driven with flows guiding the market direction by the close of fiscal year.
In the day’s trade, 220 stocks closed in the green, 178 declined and 27 remained unchanged.
The government announced that a capital gains tax would be imposed on stocks held up to one year. The government had previously agreed that the tax would only be levied on profits made from the start of the 2010-11 fiscal year on July 1. Now there are concerns the government may seek to tax gains made before that date and demand quarterly tax returns instead of the annual filing preferred by brokers.
Published in The Express Tribune, June 23rd, 2010.
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