19 June 2004	Saturday	30 Rabi-us-Saani 1425

KARACHI, June 18: Stocks on Friday finished well above the day's lows as a late burst of institutional short-covering at the lower levels altogether changed the CVT-hit future market outlook , signalling that the worst may be over irrespective of the divided analyst opinions on the CVT settlement.

The revised Capital Value Tax (CVT), however, failed to enthuse investors in the morning session as small investors indulged in near-panic selling amid fears that increase in the tax on carryover transactions may scare away the big ones and they may face financial losses in their absence.

Leading institutional traders and brokerage houses were awaiting the opportunity and lifted all the shares offered for sale by the smaller groups amid badla-related fears.

The KSE 100-share index, therefore, finished with a modest fall of 16.22 points after earlier falling sharply lower at 5,248.67 as compared to previous 5.264.89 as all leading base shares showed smart recoveries.

The early selling in part was also attributed to the murder of a political leader in the city and fears of fresh incidents of violence. The market's uncertain future outlook was also evident from the fresh early steep decline in the KSE 100-share index, which shed another 87 points or 2.5 per cent, breaching the barrier of 5,200 at one stage but afternoon session saw a lot of short-covering at the lower levels.

Day traders, jobbers and small investors were terribly shaky on the perceptions that the cost of share purchases would be much higher even under the revised CVT and tried to get out of the market just in one go.

Although the rate of CVT has cut from 0.1 per cent to 0.01 per cent, other levies including 0.005 per cent wealth tax on the purchase value of shares, 0.005 per cent on the sale value and 10 percent withholding tax on carryover business would add to the cost of share transactions, analysts said.

Under the new arrangement, the bourses have assured the CBR to collect Rs1.6 billion from the next financial year. "We don't think the cut in CVT could bring any significant positive change in the post-budget share business outlook," analysts said. "The additional levies will increase the cost of transactions taking away the attractive bait of windfall profits for the bargain-hunters."

Some others say the market could take another week or so to fully adjust itself to the changed tax net but it is pretty clear the prevailing boom-like conditions may not persist for a longer time.

"Investors were seeking total withdrawal of the CVT not cut in the rate and the tax net in which they will have to operate now could have many financial implications for many of the "big guns", they predict.

Minus signs again dominated the list under the lead of IGI Insurance, Javed Omer and Unilever Pakistan, off Rs13, Rs18.95 and Rs35 respectively followed by Adamjee Insurance, Pakistan Refinery, National Refinery, Security Papers and Shell Pakistan, which suffered fall ranging from Rs3.05 to Rs7.

Although minus signs dominated the list, some of the leading shares managed to put on good gains, leading among them being EFU Life, Treet Corporation and Arif Habib Securities, up by Rs10, Rs13.75 and Rs25.40 respectively.

Other good gainers were led by Bank of Punjab, Tata Textiles, PSO, National Foods, Atlas Honda, International Industries and Lakson Tobacco, up by Rs2 to Rs4. Trading volume rose to 292m shares from the previous 249m shares but losers maintained a strong lead over the gainers at 245 to 98, with 30 shares holding on to the last levels.

National Bank topped the list of actives, up Rs1.55 at Rs63.45 on 32m shares, followed by Fauji Cement, off 75 paisa at Rs17.05 on 26m shares, PTCL, up 40 paisa at Rs41.65 also on 26m shares, OGDC, lower by five paisa at Rs63.95 on 24m shares and DG Khan Cement, off Rs65 paisa at Rs56.70 also on 22m shares.

Other actives were led by Lucky Cement, off one rupee on 10m shares, Sui Southern Gas, easy 25 paisa also on 10m shares, Hub-Power, firm by 10 paisa on 10m shares, Maple Leaf cement, lower Rs1.20 on 9m shares and Nishat Mills easy by 15 paisa also on 9m shares.

FORWARD COUNTER: PTCL came in for active short-covering at the lower levels and rose by 35 paisa at Rs41.65 on 6m shares, followed by the PSO, higher by Rs2.45 at Rs256.50 on 5m shares, Hub-Power, steady 10 paisa at Rs32.10 on 4m shares and FF Bin Qasim Fertilizers and Pak PTA, unchanged and lower five paisa at Rs19.45 and Rs17.10 on 2m shares each.

DEFAULTER COS: Trading on this counter was relatively slow owing partly to weekend considerations. Standard Bank, fell by 15 paisa at Rs9.75 on 0.233m shares followed by Nazir Cotton, up by 20 paisa at Rs6.45 on 0.174m shares and Dandot Cement, off 60 paisa at Rs10.90 on 0.150m shares. Others were modestly traded mostly on the lower side.