Stocks extend gains on CGT relaxation hopes

Stocks on Tuesday built big on yesterday’s rally, cheering reports the government has decided to collect capital gains tax (CGT) annually, which would free up liquidity for investors, while a small down-tick in virus cases also boosted sentiment, dealers said.

Pakistan Stock Exchange (PSX) benchmark KSE-100 shares index put on 1.45 percent or 596.45 points to close at 41,665.27 points. The trade volume swelled to 489.632 million shares from 388.554 million on Monday. KSE-30 also hit a high of 1.46 percent or 251.98 points to end at 17,533.49 points.

Topline Securities in a note said the market continued its positive momentum as peaceful completion of the PDM rally coupled with lower COVID-19 cases improved sentiment at the bourse.

Major positive contributors were HUBC, ENGRO, PAKT that cumulatively added 170.43 points to the index, the brokerage said.

Ovais Ahsan, chief executive officer at Optimus Capital Management, said the market rallied on news reports suggesting relaxation in capital gains [tax] collection rules.

“Sources indicated the government may change capital gains tax collection from monthly to yearly basis,” Ahsan said.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said the market got strong support after crossing the coveted 41,000 points’ mark on improvement in the key economic numbers.

“Oil sector continued to fare well, while support also came from cement and technology sectors,” he said.

Cement was in the buying chart on rumors that exports to South Africa might resume as the African nation was likely to lift a ban it had imposed earlier, Ahmad added.

Trading activity was recorded in 393 stocks, of which 281 increased, 84 lost, and 28 remained unchanged.

Muhammad Saeed Khalid, head of research at Shajar Capital, said stocks remained robust during the day, where investors bought mainly in the IT, oil, and food stocks on fundamental basis.

“We have also noticed improved activity in the automobile and cement stocks as investors bought aggressively ahead of industry sales volume numbers,” Khalid added.

A A Soomro, managing director at KASB Securities, said the index showed strong upward movement as the number of cases and national infection rate has shown a decreasing trend.

“Although, the trend of second wave is unpredictable, with stringency increasing, optimists believe it has plateaued,” he said.

He said the technology sector heaved a sigh of relief and values were mostly witnessed in cements, Unity Foods, Hub Power, Packages Ltd, autos, and foods sector.

“If the second wave impact recedes, we should expect the broader index to keep ticking upwards in coming weeks,” Soomro added.

Pakistan Tobacco, grabbing Rs100 to close at Rs1,600/share, and Packages Limited, gaining Rs38.44 to finish at Rs551.14/share, emerged as the top gainers.

Nestle Pakistan, giving up Rs89.99 to close at Rs6,500/share, and Indus Dyeing, casting away Rs33.88 to close at Rs500.01/share, were the worst losers of the day.

With 67,865 million shares, Unity Foods Limited, led volumes chart. The food stock gained Rs1.81 to end at Rs27.47/share. Lotte Chemical’s turnover was lowest with 11,839 million traded shares, but it gained Rs0.11 to end at Rs12.94/share.