June 02, 2006	Friday	Jumadi-ul-Awwal 5, 1427

KARACHI, June 1: Stocks on Friday staged a smart recovery on active short-covering in leading oil, bank and cement shares aided by reports that capital gains tax exemption will continue up to June 30, 2007. The KSE 100-share recovered 383.08 points at 10,183.77, adding Rs103bn to the market capital at Rs2.879bn.

After several lean sessions, the market received positive news allaying widely rumoured investor fears that the exemption may be withdrawn and capital gains may be brought in the tax net in the budget.

The market has fallen by about 20 per cent during the last couple of weeks and being in highly oversold position needed correction and that came in the form of short-covering. The KSE 100-share index rebounded from the previous lows and finished with a massive recovery of 383.08 points or 3.91 per cent at 10,183.77.

The rally was attributed to the prime minister’s assurance that the stock markets will remain exempted from the capital gains tax (CVT) in the budget, one of the chief irritants exploited by the bears during the last couple of sessions after spreading rumours that the government was going to withdraw this exemption.

The recovery was widely welcomed as it raised hopes that the worst may be over and it could lead to bailing out of many trapped in the negative fallout of speculative manipulation of the share market, brokers said.

“Owing to persistent decline over the last four sessions, blue chips in the oil, bank and cement shares had attained attractively lower levels and only fools could stay away in the developing corporate scenario,” analysts said “the extension of CVT exemption is expected to inspire fresh buying in the coming sessions.”

OGDC, Pakistan Oilfields, Pakistan Petroleum, PTCL, National Bank, MCB and other blue chips, which holds a weightage of 50 per cent in the index virtually raced to their pre-reaction levels on strong short-covering.

“The pre-budget speculative buying may still have to make bigger showing, it appears to be around and it seems pretty difficult for it to miss the current lower levels, notably on selected counters,” brokers said.

“The federal budget is just a couple of days away,” an analyst said, adding “I foresee a lot of two-way activity, which is expected to pull out the market from the current impasse”.

Plus signs dominated the list after several lean sessions under the lead of Shell Pakistan and IGI Insurance, up by Rs21 and Rs25.10, followed by National Bank, MCB, Pak-Suzuki Motors, PSO, Dawood Hercules, Packages, Pakistan Services, Sanofi-Aventis, Pakistan Petroleum and IGI Insurance, which posted gains ranging from Rs7.75 to Rs14.95.

Grays of Cambridge and Pakistan Refinery were leading among the losers, off Rs12.40 and Rs14.25 respectively. They were followed by Artistic Denim, United Sugar, Lakson Tobacco, Shell Gas and Arif Habib Securities, which fell by Rs5 to Rs9.95.

Trading volume remained light as investors who had purchased at the highly inflated levels held on to their positions. As a result, turnover fell to 173m shares from the previous 188m shares as gainers forced a strong lead over the losers at 266 to 66, with 27 shares holding on to the last levels.

OGDC topped the list of most actives, up by Rs6.40 at Rs135 on 33m shares, followed by National Bank, higher by Rs7.75 at Rs212 on 25m shares, Pakistan Petroleum, higher by Rs8.85 at Rs230 on 15m shares, PTCL, up by Rs2.20 at Rs46.20 on 8m shares, Pakistan Oilfields, higher by Rs16 at Rs363 on 8m shares, Fauji Fertiliser Bin Qasim, firm by Rs1.60 at Rs33.70 on 8m shares and D.G.Khan Cement, higher by Rs4.25 at Rs95 on 7m shares.

Other actives were led by Lucky Cement, up by Rs4.90 on 6m shares, Bank of Punjab, higher by Rs3.40 on 5m shares and Fauji Cement, firm by 95 paisa on 4m shares.

DEFAULTER COS: Owing to recovery in the ready section, active trading was witnessed on this counter where prices generally finished with under the lead of Indus Polyester, up by 85 paisa at Rs5.95 on 0.149m shares followed by Pangrio Sugar, unchanged at Rs7.90 on 0.113m shares. Some others were also actively traded on the higher side.