Tax-worries whack stocks

Volumes thin to 2-week low
KARACHI: Share prices continued to slide on second day of the week pushing the benchmark index lower by more than 1 per cent on Tuesday with volumes reduced to near two-week low, mainly due to what dealers said were pre-budget tax worries and the absence of leverage product. The benchmark KSE 100-Index fell by 85 points or 1.18 per cent to close at 7,125 points.
"Absence of ready board leverage the only reason for the ongoing price erosion/inflation, further delay in accepting the fact will continue to harm the local bourses," said Hasnain Asghar Ali, Head of Sales Aziz Fidahusein & Co.
Hasnain added that despite confirmation by FBR and finance authorities that no new taxes will be imposed on the share business in the upcoming budget, positive developments on Swat operation, expectations of early & successful completion of the operation, a comprehensive plan outlined by the PM to increase textile exports increased expectations of likely incentive to the textile manufacturers in the upcoming budget, rallying oil prices and participation by foreign players at the local bourses, the local equity market continued to give a deserted look, thus negating the views that the mentioned issues are the main reasons for lacklustre, and the local bourses continue to stay indifferent from the positive developments.
After a flat beginning, market showed some mix performance during the first hour of the session where at a moment it touched an intra-day high of 7,230 points (+ve 19 points), thereafter it finally went down into the bearish region mainly due to the selling pressure on fears of taxation on the capital market in the upcoming budget. Therefore the losses were multiplied and at about 1:48 pm it touched its lower level of the day of 7,087 points (-ve 123 points) however some support at lower levels allowed the index to close above 7,100 levels.
Foreigners too were on the selling side as according to the NCCPL figures, there was a net foreign selling of $2.1 million during the day.
KSE 30-Index dropped 104 points - 1.34 per cent to close at 7,671 points and KSE all-share index lost 59 points - 1.15 per cent to close at 5,110 points.
Volumes shrank further to 83 million shares - -down more than 29 million shares as compared with 113 million shares traded a day earlier. Out of total 308 active issues, 211 declined and 84 advanced while 13 issues remained unchanged.
Analysts said the market may show some range bound activities before the federal budget but they also add that news regarding taxation on the capital market would certainly have a negative impact on the market. They also urge for an early introduction of new leverage product in the market.