KARACHI, June 15: Stocks on Tuesday staged a smart recovery followed by strong institutional support on reports of verbal official assurance to bourses chiefs that the government would withdraw the Capital Value Tax (CVT) after the committee submits its findings on the issue during the next couple of days.

The KSE 100-share index recovered 100.79 points or about two per cent at 5,318.36 as compared to 5,217.57 a day earlier. The market capital also rose by Rs26.054bn at Rs1,429.184bn in an expanded activity of 428m shares.

The setting up of the official committee considerably eased the violent broker reaction as sanity returned to the market, although opinion are divided over the final settlement of the CVT issue.

An unofficial assurance was given to the high-powered delegation of bourses who met the CBR chief and the finance minister on Monday and apprised them of the negative fallout of the levy on the share business.

All the leading shares finished partially recovered under the lead of OGDC and some other blue chips. All the sectors also participated in the snap recovery, with energy, chemical, cement, textile, major beneficiary of the fiscal reliefs, banks and some others being in the forefront.

Insurance shares failed to respond to general trend as its demand for capital gains tax exemption was not met. Bulk of the support came from the financial institutions, which made massive covering purchases at the lower levels, notably on the blue chip counters followed by brokerage houses and general investors.

"On Monday, the stock market was in virtual turmoil as investors and brokers were on the rampage protesting against the CVT, seeking closure of the market until it was not withdrawn," analysts said.

Although official announcement about the levy will be announced in the parliament after the joint committee set up by the government to sort out the issue and suggest an alternative would give its reports during the next couple of days.

"I don't think the CVT issue will be settled soon despite bourse chief's offer to increase withholding tax on their commission income from five to 10 per cent in lieu of the CVT," says a leading analyst. "It could take weeks and in the meantime the violent reaction witnessed on Monday could lose its intensity."

Broader market, therefore, performed credibly well under the lead of Javed Omer, Glaxo-SKF, Goodluck Industries, IGI Insurance, Fateh Textiles, Arif Habib Securities and Unilever Pakistan, which posted gains ranging from Rs7.80 to Rs110, the highest rise being in Unilever Pakistan followed by reports that it sold its edible oil business to a foreign party.

Other good gainers were led by Faisal Spinning, Blessed Textiles, Mehmood Textiles, Sapphire Fibre, Kohat Cement, Shell Pakistan, PSO, Pakistan Oilfields, Al-Ghazi Tractors, Indus Motors and ICI Pakistan, which up by Rs4 to Rs6.15.

Losers were led by Bolan Casting, Surays Textiles, New Jubilee Insurance EFU Life Insurance, Pakistan Refinery, PICIC and Millat Tractors, off Rs2 to Rs14.50. Trading volume showed sharp improvement at 428m shares as compared to 196m shares a day earlier. Gainers forced a strong lead over the losers at 251 to 87, with 16 shares holding on to the last levels.

The most active list was topped by Fauji Cement, steady by 40 paisa at Rs17.89 on 60m shares followed by OGDC, up Rs2 at Rs65.10 on 52m shares, DG Khan Cement, firm by 80 paisa at Rs58.80 on 41m shares, Pak PTA, off 75 paisa at Rs16.95 on 21m shares and National Bank, higher by Rs1.85 at Rs63.55 on 19m shares.

Other actives were led by Nishat Mills, up Rs3.05 on 20m shares, Maple Leaf Cement, firm by 20 paisa on 19m shares, Lucky Cement, up 70 paisa on 17m shares, Sui Southern gas, higher by Rs1.20 on 15m shares and PTCL, up 60 paisa on 14m shares.

FORWARD COUNTER: Pak PAT came in for renewed selling and fell 95 paisa at Rs16.85 on 6m shares followed by PTCL, up 40 paisa at Rs41.90 on 4m shares, PSO, sharply higher by Rs6 at Rs355 on 3m shares, Bank Alfalah, firm by 60 paisa at Rs61.80 also on 3m shares and FF Bin Qasim, steady by five paisa at Rs19.70 on 3m shares.