KARACHI, Aug 17: Stocks on Tuesday staged a snap recovery as investors flooded the market and covered positions at the lower levels aided by rumours that the government may withdraw the Capital Value Tax levied in the federal budget.

Although chances of a CVT waiver appeared a remote possibility but speculative forces made it look so and lured investors back in the market, giving the needed push to a falling prices and terribly sluggish trading volumes, brokers said.

The rumour was given credence on reports that India is also withdrawing an identical levy to restore normalcy to stock trading, which had shown a considerable contraction after the imposition of the CVT.

The KSE 100-share index virtually raced toward its pre-reaction levels after the rumour and finished with a smart recovery of 48.08 points at 5,377.75 as compared 5,335.67 a day earlier as all the leading base shares finished higher in an expanded turnover figure. The market capital also recovered Rs13bn at Rs1,450.192bn.

It may test the index level of 5,400 on Wednesday as together with a possible election victory of the prime minister-designate in the Aug 18 elections, the CVT withdrawal rumour could take it to any highs.

Finance Minister Shaukat Aziz, now prime minister in waiting, has imposed Capital Value Tax (CVT) on the share business at the rate of 0.01 per cent despite protests by the bourses and brokers.

But since then the daily volume started shrinking on the KSE from an average figure of 350m shares to 79m shares on Aug 16, and it was speculated it may fall further as investors are progressively losing interest in daily trading.

There is, however, no official word on the issue but speculators may have taken cue that the election of Shaukat Aziz as prime minister could well prove the prelude of Indian action on the CVT, analysts said.

"The new prime minister may oblige investors after his election to the top slot as a gift in the form of CVT waiver", they hope. For the first time after several lean sessions, advancing shares forced a decisive lead over the losing ones at 231 to 75, with 42 shares holding on to the last levels.

Leading gainers were led by Bata Pakistan, Colgate Pakistan, Atlas Battery, Arif Habib Securities, Jahangir Siddiqui Bank, Aventis, and Shell Pakistan, which posted gains ranging from Rs4.80 to Rs17, largest rise being in Shell Pakistan.

Other good gainers included Exide Pakistan, Shakarganj Sugar, Pakistan Engineering, ECO Pak, Suraj Cotton, Noon Sugar, EFU Life and Javed Omer, up by Rs3 to Rs4.25. Prominent losers included Bhanero Textiles, Pakistan Hotels, Al-Abbas Sugar, Sapphire Fibre, National Foods, Thal and IGI Insurance, off Rs2.95 to Rs5.

Trading volume swelled to 226m shares from the previous 79m shares, Fauji Fertilizer Bin Qasim being the top scorer, up 90 paisa at Rs21.25 on 42m shares followed by OGDC, higher by Re1 at Rs66.50 on 38m shares, D.G.Khan Cement, up by Rs1.15 at Rs57.15 on 15m shares, MCB, higher by Rs1.10 at Rs55.25 on 11m shares, Lucky Cement, firm by 60 paisa at Rs39.15 on 10m shares and National Bank, up by 90 paisa at Rs72.90 on 7m shares.

Other actives were led by Fauji Cement, up by 25 paisa on 9m shares, Sui Northern Gas, higher by Re1 on 7m shares and Askari Bank, up 75 paisa on 6m shares.

FORWARD COUNTER: Pakistan Petroleum came in for active support and rose by Rs1.20 at Rs108.85 on 18m shares followed by F.F.Bin Qasim, 80 paisa at Rs22.20 on 7m shares, OGDC, higher 90 paisa at Rs66.55 on 6m shares, PTCL, easy five paisa at Rs42.35 on 3m shares and D.G.Khan Cement, up by Rs1.10 at Rs57.35 on 2m shares.