THE Karachi Stock Exchange 100-share index last week virtually raced toward its pre-reaction level of 15,000 points as a combination of positive news including budgetary leaks and some fiscal relieves generated a lot of covering purchases almost on all counters.

Unlike previous years, the underlying sentiment showed no sign of nervousness as the KSE high-ups’ meetings with the country’s economic managers were said to be in line with the investors’ perceptions and were well-received by all and sundry.

The tax exemption on capital gains for the next two financial years put the market back on the rails after several lean sessions during the last week as the bullish optimism dominated the trading followed by a galore of upper locks on selected counters.

The KSE 100-share index recovered 1,004.05 points at 13,134.56, adding Rs300bn to the market capital at Rs4,046.314bn and so did its junior partners which recovered 1,351.56 points at 15,449.56. Although pre-budget rumours about the relief in taxes did take their toll on some of the counters, the on-balance trend remained uppishly inclined thanks to strong selective support at the attractively lower levels.

“There could be some post-budget sectoral adjustments linked to taxation measures, indications are that the extension of exemption on capital gains tax alone could keep the market in a good shape,” said a leading stock broker adding “indications are that the budget would be investment-friendly”.

Leading stock analysts also discussed the post-budget market scenario including the direction of the KSE index if all goes well with the fiscal measures.

The big question being debated by the analysts was whether or not the index would improve its previous all-time record level of 15,976 established early this year alone on a positive budget, sans political uncertainty in the backdrop of two opinions on the constitutional package and the talk of president’s resignation.

It was in this background that the KSE 100-share index roared back to its pre-reaction level and surged by 6.5 per cent on heavy buying triggered by two-year extension in the Capital Gains Tax exemption and status quo on the Capital Value Tax.

It virtually ran-up on heavy covering purchases in the index heavy base shares and finished close to at the week’s high and a massive surge of 610.03 points, recouping a massive amount of Rs185.479bn to add to the market capital at Rs4,037.850bn on Wednesday alone.

“The new regime has given its pre-budget maiden gift to the investors well above their demand”, analyst Faisal A. Rajabali said.

The massive index rise, which allowed the market capital to recoup about Rs300bn was, however, not all-time single session record as it was set on Jan 3, this year at 643.04 points at 13,996.42 after the postponement of elections from Jan 8, to Feb 18.

“The market’s massive run-up in the backdrop of some political irritants signals that there could be more pleasant surprises for the stock traders,” analyst Hasnain Asghar Ali predicts.

The market, which had been awfully weighed during the last month and had lost about 2,000 points or nine per cent remained in its real self during the pre-budget sessions, he added.

“Investors welcomed the tax exemption as was reflected by heavy covering purchases on all counters having potential of capital gains at the current lows,” analyst Ahsan Mehanti said adding, “oil, bank, cement, and blue chips on the other counters rose sharply without matching selling from any quarter”.

The general perception is that the current buying euphoria could be sustained during the pre-budget sessions as major investors’ worry on the capital gain tax has been removed and that is perhaps why sellers kept to the sidelines anticipating further rise in share values.

Upper locks were witnessed on most of the blue chips, top gainers were led by Nestle Pakistan and Unilever Pakistan, up by Rs57.49 and Rs81 followed by Shell Pakistan, PSO, Pakistan Oilfields, Millat Tractors, Dawood Hercules, Engro Chemical, Colgate Pakistan, Pakistan Services, EFU General and Life, Attock Petroleum, MCB, Lakson Tobacco, and several others as their share values had risen by five per cent in a session.

Forward counter: Speculative issues on the forward counter also followed the lead of their counterparts in the ready section and generally finished with previous losses fully recouped under the lead of MCB, National Bank and Pakistan Oilfields.

OGDC, Lucky Cement, Nishat Mills, D. G. Khan Cement, Bank of Punjab, Arif Habib Securities and most of other leading shares also ended with fresh gains.—Muhammad Aslam