The Federal Information Minister's statement about additional taxation on capital market in the upcoming federal budget added to the nervousness on the Karachi Stock Exchange on Thursday. The market opened in the negative zone and the index hit intra-day low level of 6,841.55 points, going down by 219.17 points.
However, late buying supported the market to minimise its intra-day losses and the index finally closed at 6,969.82 points with a net loss of 90.90 points. The market witnessed a sharp recovery of 128.27 points from its intra-day low level.
Trading volumes slightly increased, however remained at the lower side at 111.467 million shares, compared to already low volumes of 80.422 million shares recorded on Wednesday. The overall market capitalisation declined by Rs 29 billion to Rs 2.067 trillion. Out of the total 312 active scrips, 232 closed in the negative and only 70 in the positive, while the value of 10 scrips remained unchanged.
Adamjee Insurance performed exceptionally well despite a declining trend and gained Rs 2.72 to close at Rs 83.47 with 8.489 million shares. In the cement sector, DG Khan Cement, Maple Leaf and Lucky Cement declined by Rs 0.02, Rs 0.46 and Rs 1.20 to close at Rs 25.50, Rs 4.04 and Rs 53.37 with 8.410 million shares, 4.593 million shares and 4.507 million shares respectively.
Jahangir Siddiqui Co decreased by Rs 1.07 to close at Rs 24.13 with 7.925 million shares. Arif Habib Sec closed at Rs 26.16, down by Rs 0.47 with 4.315 million shares. In the banking sector, Bank Al Falah, NBP, NIB and Bankislami Pakistan declined by Rs 0.51, Rs 1.43, Rs 0.27 and Rs 0.18 to close at Rs 11.74, Rs 70.68, Rs 5.21 and Rs 6.20 with 4.415 million shares, 3.716 million shares, 3.415 million shares and 3.114 million shares respectively.
Exide (Pak) and Atlas Honda were the highest gainers and gained Rs 5.50 and Rs 4.23 to close at Rs 115.60 and Rs 88.84 respectively, while Wyeth Pak and Siemens Pak were the worst losers by losing Rs 66.83 and Rs 46.00 to close at Rs 1283.17 and Rs 878.00 respectively.
Hasnain Asghar Ali at Aziz Fidahusein Co said that various interpretations of the Federal Minister's statement on taxation added to the nervous trend on the local bourses, which are already facing drought impact, after the elimination of ready board leverage, indeed the only reason for the lack luster activity.
Taking advantage of the element of suspense in the statement 'that any two of the four identified sectors will be taxed' the bears took the control and the shallow market witnessed massive price erosion. The main board however invited accumulation on extreme adjustments, which continued throughout the session, as after every interval, the stagnant market continued to invite nervous sellers, thereby providing the interested buyers a successful bargain, as major stocks hit the lower limits due to distress selling.
A leading analyst at Topline Securities, Muhammad Sohail said that the share market remained under pressure throughout the day after the Information Minister mentioned that stock markets would also be brought under tax net. However, at the end of the session there was a strong recovery after a US based newspaper quoting the Finance Advisor, Shaukat Tarin clarified that stock market will be taxed from next year and not this year.