KARACHI, June 7: The post-budget rally on the stock market failed to extend itself on Wednesday followed by profit-selling triggered by some rethinking on an increase in capital value and withholding tax and their negative impact on the share trading costs. The KSE index shed 330 points or 3.13 per cent at 10,202.36, eroding Rs83 billion from the market capital.

Another factor, which hastened the selling, was reports of an increase in cut-off rate of T-bills and an international rating agency’s comments on the budget, which in its opinion, may further widen the trade deficit.

The KSE 100-share index reacted from the overnight highs to finish lower by 329.50 points or 3.13 per cent at 10,202.30 after earlier rising to 10,574.27 on active follow-up support carried over from the post-budget session.

However, it closed well above the session’s low of 10,166.91, reflecting the reaction was psychological rather than caused by some adverse news indicating that it could rise from the current lows.

“I don’t think the increase in the tax on the share business could push the market down from the robust high as the budget contains some reliefs also for the investors,” says a leading analyst, adding “the reaction may have political undertone fuelled by general adverse comments.”

The reversal was led by the same set of market trend-setters, which caused the post-budget robust rally. OGDC, National Bank, D.G.Khan Cement and Pakistan Petroleum and some others finished with limit losses and lower-locks were applied to forestall fresh decline.

Much of the activity was confined to institutional manoeuvring and a good bit of portfolio adjustments, while general investors kept to the sidelines and decided to re-enter the market after the dust raised by negative comments on the budget settles down, brokers said.

Analysts said banks have the reasons to worry as the levy of central excise duty on services may temporarily have negative impact on their profits but the 3pc cut in corporate tax to 35pc was expected to offset some of losses.

The next couple of sessions may be crucial for the direction of the post-budget market as by that time investors would have fully analysed the negative fall-out of some of the adverse fiscal measures.

Unilever Pakistan and Pakistan Services, which rose by Rs30 and Rs14.10 were leading among the gainers, followed by Pakistan Engineering, Al-Ghazi Tractors, Grays of Cambridge, Gatron Industries, Lakson Tobacco, Treet Corporation and Pakistan Services, which posted gains ranging from Rs4.35 to Rs14.10.

Pakistan Oilfields and IGI Insurance fell by Rs15.10 and Rs23 on late selling. Other prominent losers were led by United Bank, Adamjee Insurnace, Attock Petroleum, MCB, National Bank, OGDC, Pakistan Petroleum and Abbott Lab, off Rs6 to Rs11.70.

Trading volume fell to 178m shares from the previous 265m shares as losers forced a strong lead over the gainers at 238 to 59, with 35 shares holding on to the last levels.

OGDC topped the list of most actives, off by limit fall of Rs7.10 at Rs135.10 on 36m shares followed by National Bank, lower Rs10.75 at Rs207.75 on 15m shares, D.G. Khan Cement, off Rs5.05 at Rs96 on 15m shares, Fauji Fertiliser Bin Qasim, easy Rs1.65 at Rs32.60 on 12m shares, Pakistan Petroleum, off Rs11.70 at Rs222.95 on 10m shares, Pakistan Oilfields, lower by Rs15.10 at Rs355.90 on 7m shares and MCB, off Rs9.50 at Rs204.50 on 5m shares.

Other actives were led by Lucky Cement, off Rs4.90 on 10m shares, Bank of Punjab, lower 70 paisa on 8m shares and Fauji Cement, easy 85 paisa also on 8m shares.

FORWARD COUNTER: National Bank again came in for active profit-selling on the cleared list and suffered sharp decline of Rs10.25 at Rs209.25 on 20m shares followed by OGDC, off Rs6.85 at Rs134 on 19m shares, Lucky Cement, lower Rs5 at Rs105.50 on 10m shares.