Karachi stocks extend overnight loss as CGT hike proposed

Karachi stocks on Thursday extended overnight losses as investors fret over the proposed hike in taxes on capital gains in the upcoming budget, dealers said. Analyst Mohammad Rizwan at Topline Securities said the market closed in the negative zone after the Federal Board of Revenue proposed increase in capital gains tax in 2015/16 budget, shaking confidence of buyers.
The benchmark Karachi Stock Exchange (KSE) 100-share Index shed 79.11 points, or 0.24 percent, to close at 32,763.48 points. KSE-30 shares index lost 114.06 points, or 0.55 percent, to end at 20,776.20 points.
As many as 344 scrips were active; of which 147 advanced, 173 declined and 24 remained unchanged. The ready market volumes stood at 148.710 million shares as compared to 200.102 million shares in the last trading session.
Moving forward analysts expected that the market will remain lackluster ahead of the budget and recommended investors to stick to fundamentally strong stocks.
Analyst Mohammad Mobeen at JS Global Capital said sentiments got soured following news reports regarding possible raise in capital gains tax (CGT) in the upcoming budget.
The tax rate was proposed to be increased to 15 percent from 12.5 percent for shares sold within a year and to 12.5 percent from 10 percent after one year and before two years. A new CGT of 7.5 percent was proposed between two and five years.
“Fertiliser sector was depressed as the government intended to impose a uniform gas infrastructure development cess on old and new fertiliser plants in view of the ruling issued by the Competition Commission of Pakistan,” Mobeen said.
A likely increase in gas prices kept the cement sector in the red. However, this bode well for share prices of gas distribution companies.
Sui Southern Gas Company and Sui Northern Gas Pipelines Limited rose 1.86 percent and 5.0 percent, respectively.
Banking shares invoked mixed sentiments after Wednesday’s recovery.
Analyst Ahsan Mehanti at Arif Habib Commodities said profit taking was witnessed in selected stocks on concerns for falling banking spreads and uncertainty over the federal budget 2015-16.
Weak global crude prices played a catalyst role in bearish activity amid late session support in the leveraged stocks.
Highest volumes were witnessed in Pak Elektron with a turnover of 14.567 million shares. The scrip inched up 26 paisas to close at Rs68.16/share. It was followed by Byco Petroleum with a turnover of 12.832 million shares. It shed 28 paisas to end at Rs13.54/share. Ghani Automobile was the third with a turnover of 12.625 million shares. It rose 69 paisas to finish at Rs7.97/share.