Share prices have undergone pressure and received more losses following a string of rumours about a possible decision by the government to levy capital gain tax on stock business. Selling pressure gripped the market and it mostly remained in the negative zone to finally finish with a weak note.
The LSE-25 Index, with a loss of 30.65 points, finished at 4,754.93, as compared to 4,785.58 points. Overall turnover amounted to 26.081 million shares from 31.124 million, showing a fall of 5.043 million shares. The opening of the market was positive, but the trend proved very short-lived and soon equities came under pressure, which continued till the close, brokers said.
The rumour that the government would withdraw exemption of capital gains tax was the key factor for the day's pressure, they added. The recent tragic incident in Karachi, which reportedly claimed 12 lives, also added to the market woes. However, Nishat Mills, PSO and some selective chips in cements and banks gave strong resistance to the selling pressure and played a role in curtailing the losses.
Mirza Muhammad Irfan of Capital Vision Securities Limited said Finance Minister Ishaq Dar's statement about levy of capital gain tax had made the market people believe that now the exemption which they had been enjoying since long was being withdrawn. This perception caused unrest in the market and people pocketed profits at available margins, he added.
There were also unconfirmed reports that the capital gain tax could be imposed on stock market, while mutual funds could continue enjoying the exemption. If this decision was taken, it would have adverse affects on the stock market as people would shift their from equity market to mutual funds, he viewed.
He said that brokers had suggested to the government that if it was committed to take back the exemption of capital gain tax, then it should at least provide relief to them in capital value tax.
"On the other hand, the Securities and Exchange Commission of Pakistan (SECP) wants to increase the cost of doing stock business to 'reduce fluctuation in the market'," he claimed. He said lawlessness in Karachi had also concerned the market people now being careful to go for fresh positions. He said it was unfortunate that whenever the market reached record high levels, some thing untoward happened, which affected the market sentiment badly.
He said the market was fundamentally strong and that was why some scrips, including Nishat Mills, some oil compnies, banks and securities scrips played well on Thursday, despite heavy pressure.
Overall, 108 scrips changed hands, of which 12 were up, 48 down, while 48 were equal to their overnight levels. Among major gainers, International Industries soared by Rs 7.15, Nishat Mills Rs 5.90, PSO and DG Khan Cement rupees four and UBL Rs 1.05.
In negative column, ICI Pakistan shed rupees nine, Arif Habib Securities Rs 7.80, Adamjee Insurance Rs 7.50, Pakistan Refinery Rs 7.05 and Pakistan Oilfields rupees five. DG Khan Cement and Fauji Fertiliser led the volume leaders with 3.276 million and 3.170 million shares.