After witnessing bullish trend during last two consecutive weeks, the Karachi share market took a downturn in the outgoing week ended April 11, 2008 as the investors opted for profit-taking due to law and order situation and issue of capital gain tax.
The benchmark KSE-100 index declined by 41.56 points on week-on-week basis to close at 15,430.89 points level, while the junior KSE-30 index lost 67.10 points on weekly basis and settled at 18,792.76 points level.
Trading activity slightly improved during the week as the average daily volume of ready market increased by 3 percent on week-on-week basis to 293.719 million shares as compared to 286.050 million shares traded during the previous week. The average daily turnover of futures market increased by 33 percent on weekly basis to 77.278 million shares against 58.210 million shares previously. The overall market capitalisation declined by Rs 15 billion on weekly basis to reach Rs 4.722 trillion on the end of the week.
The market started on a positive note on Monday. However, profit-taking pushed the market in negative zone and the KSE-100 index closed at 15,469.74 points level, down by 2.71 points. The KSE-30 index, however, managed to close in positive at 18,871.15 points, up by 11.29 points.
The selling pressure continued at the share market on Tuesday, but it managed to close in positive and the KSE-100 index closed at 15,474.07 points, marginally up by 4.33 points. The KSE-30 index increased by 15.71 points and settled at 18,886.86 points level.
On Wednesday, the market witnessed healthy buying in initial hours. Once again the selling pressure pushed the market in negative zone. Finally, the KSE-100 index closed at 15,404.17 points level, down by 69.90 points. The KSE-30 index lost 158.73 points to settle at 18,728.13 points level.
Bearish trend continued at the share market on Thursday and the KSE-100 index lost another 99.25 points to close at 15,304.92 points level. The KSE-30 index declined by 71.71 points and settled at 18,656.42 points level.
The share market recovered partially its weekly losses on Friday due to healthy buying mainly in E&P sector stocks as the KSE-100 gained 125.97 points to close at 15,430.89 points level. The KSE-30 index increased by 136.34 points and settled at 18.792.76 points.
Bilal Hameed, an analyst at JS Global Capital Limited, said that capital gain tax (CGT) issue remained in the limelight with statements made by the SECP, the KSE, and Finance Minister Ishaq Dar in this regard. The SECP and the KSE were in favour of extending the capital gain tax exemption, the finance minister hinted at removing the tax exemption. These statements contributed to the uncertain market behaviour. The finance minister's assessment that government is expecting FY08 GDP growth to end up at 6 percent while inflation is forecast at 10 percent. In addition, FY08 fiscal deficit is expected to reach a significant 9.5 percent of GDP.
This disturbing outlook on economic front hurt investors' confidence at the local bourse. Rumours of NML booking its capital gain on MCB investments created interest in the stock and its price rose by 3 percent during the week. The similar news regarding DG Khan Cement also prevailed in the market and the price went up by 2.5 percent on week-on-week basis.
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