KARACHI: Despite announcement of healthy corporate results on Wednesday, the market witnessed depressed activity amid low volumes because of the uncertainty over agreed mechanism of the capital gains tax on shares trading in the coming budget.
“The reports regarding likely revision of capital gains tax rate on stocks, already agreed with the Finance Ministry, put pressure on the market,” said Khurram Schehzad, head of research at Invest Capital.
“The reaction by both local and foreign investors was quite the same Ö that is offloading,” he said. “The market is very sensitive at such levels and reacts to any sort of development, even the rumours.”
The KSE-100 Index closed at 10,590.21 points with a loss of 51.31 points, or 0.48 per cent. The KSE-30 Index closed at 10,740.33 points with a loss of 71.97 points, or 0.67 per cent.
The market breadth was not in favour of the gainers, as 169 companies advanced, 212 declined and 29 remained unchanged.
The market witnessed cautious activity throughout the session, despite foreign interest, mainly due to reports published in the press on capital gains tax, said analysts.
However, some recovery was observed in the closing hour, following impressive results posted by POL and MCB Bank, they said.
Nishat Chunian closed on the upper limit due to better results expectation. Maple leaf was on top of volume leaders on the back of recent loan rescheduling.
“Intense sell-off was witnessed in the high-priced main board stocks and the benchmark in early hours registered triple-digit loss. Oil sector stocks witnessed massive offloading followed by fertilizer and banking scrips,” said Hasnain Asghar Ali, a dealer at Aziz Fida Husein.
Issues such as inflation, energy crisis and circular debt stayed unresolved, the likely introduction of capital gains tax with the rumours that the rate will be higher than what had been agreed, along with the introduction of new taxes in the upcoming budget remained a cause of concern for market participants, he said.
However, selective and calculative accumulation by the corporate participants and the reports of re-introduction of CFS MK-II by May reduced the selling intensity and some recovery was observed during the last hours.
“Selling pressure continued on renewed concerns over implementation of capital gains tax mechanism on the stock exchanges and investors’ preferred to book profits, despite good result announcements in the banking and textile sector companies,” said Ahsan Mehanti, Chief Executive Officer at Shahzad Chamdia Securities.
Rising circular debt in the energy sector and uncertainty in the global capital markets remained a major concern for the investors in the quarter-end results announcement, he added.
Trading activity was better as compared to the last trading session, as the ready market volume stood at 145.502 million shares, as compared to 137.058 million shares a day earlier. Futures market volume, however, stood at 2.754 million shares, as compared to 2.697 million shares during the last trading session.
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