Bulls dominate proceedings at KSE
The bulls continued to dominate at the Karachi Stock Exchange on Monday egged on by the announcement of major aid projects for the country by US Secretary of State Hillary Clinton.
The benchmark KSE 100-index gained 48 points to close at 10,202 level.
The broader market was also bullish. Shares of 386 companies were traded on Monday. Over 202 advanced, 160 posted losses while 24 remained unchanged. Only 67 million shares were traded today, as compared to Friday’s trading volume of 56 million shares.
Mansha group stocks led the day’s gains and volumes. Nishat Mills Limited (NML) witnessed trading volume of 6.74 million shares, gaining Rs2.31 to end the day at Rs50.13. Nishat Mills (Chunian) also saw 5.17 million shares change hands. It closed 43paisas higher at Rs17.66. Volume of Jahangir Siddiqi Co (JSCL) stood at 5.89 million shares.
Banking stocks also received interest as rumors circulated regarding a possible reduction in capital gains tax charged on banks for the sale of shares. Traders suggested the current rate of up to 35 per cent charged on banks may be equated with Capital Gains Tax (CGT) for insurance companies. At present CGT is charged at 10 per cent and 8 per cent on holdings of up to six months and one year respectively. However, no official confirmation has been made on this front as yet.
Analysts said the cement sector witnessed renewed interest on Monday after the approval of the construction of Diamer-Bhasha dam. They said the cement sector possesses excess capacity and has been facing losses due to restricted demand in recent months. The construction of the dam will likely revive demand for local manufacturers, analysts predict. Director Arif habib Investments Ehsan Mehanti said that “the US-backed transit trade deal between Pakistan and Afghanistan, higher crude oil prices in international markets and the announcement by the US Secretary of State for $500 million for new aid projects in Pakistan played a catalyst role at the KSE”. He added that the local bourse still presented lucrative yields compared to weaker capital markets abroad.
Other analysts pointed out that the upcoming monetary policy announcement by the State Bank is scheduled for the end of July. Analysts are divided about their ability to reduce inflation through a tighter monetary stance, but the International Monetary Fund has asked the government to contain rising prices. Economist asserted that
“Inflation induced by exchange rate depreciation and higher food, fuel and power prices requires fiscal and administrative measures to control,” Asad Farid, an economist.
“A tougher monetary stance, higher government borrowing and tough conditions linked to release of International Monetary Fund (IMF) tranche will keep the economic horizon polluted,” said Hasnain Asghar Ali, a senior analyst at Aziz Fida Husain. He added that much is riding on the introduction of leverage to the local bourses and advised investors to put money in selected stocks until further details about the intended product are made public.
Published in The Express Tribune, July 20th, 2010.
The benchmark KSE 100-index gained 48 points to close at 10,202 level.
The broader market was also bullish. Shares of 386 companies were traded on Monday. Over 202 advanced, 160 posted losses while 24 remained unchanged. Only 67 million shares were traded today, as compared to Friday’s trading volume of 56 million shares.
Mansha group stocks led the day’s gains and volumes. Nishat Mills Limited (NML) witnessed trading volume of 6.74 million shares, gaining Rs2.31 to end the day at Rs50.13. Nishat Mills (Chunian) also saw 5.17 million shares change hands. It closed 43paisas higher at Rs17.66. Volume of Jahangir Siddiqi Co (JSCL) stood at 5.89 million shares.
Banking stocks also received interest as rumors circulated regarding a possible reduction in capital gains tax charged on banks for the sale of shares. Traders suggested the current rate of up to 35 per cent charged on banks may be equated with Capital Gains Tax (CGT) for insurance companies. At present CGT is charged at 10 per cent and 8 per cent on holdings of up to six months and one year respectively. However, no official confirmation has been made on this front as yet.
Analysts said the cement sector witnessed renewed interest on Monday after the approval of the construction of Diamer-Bhasha dam. They said the cement sector possesses excess capacity and has been facing losses due to restricted demand in recent months. The construction of the dam will likely revive demand for local manufacturers, analysts predict. Director Arif habib Investments Ehsan Mehanti said that “the US-backed transit trade deal between Pakistan and Afghanistan, higher crude oil prices in international markets and the announcement by the US Secretary of State for $500 million for new aid projects in Pakistan played a catalyst role at the KSE”. He added that the local bourse still presented lucrative yields compared to weaker capital markets abroad.
Other analysts pointed out that the upcoming monetary policy announcement by the State Bank is scheduled for the end of July. Analysts are divided about their ability to reduce inflation through a tighter monetary stance, but the International Monetary Fund has asked the government to contain rising prices. Economist asserted that
“Inflation induced by exchange rate depreciation and higher food, fuel and power prices requires fiscal and administrative measures to control,” Asad Farid, an economist.
“A tougher monetary stance, higher government borrowing and tough conditions linked to release of International Monetary Fund (IMF) tranche will keep the economic horizon polluted,” said Hasnain Asghar Ali, a senior analyst at Aziz Fida Husain. He added that much is riding on the introduction of leverage to the local bourses and advised investors to put money in selected stocks until further details about the intended product are made public.
Published in The Express Tribune, July 20th, 2010.