KSE edge lower after budget, but seen steady
KARACHI: Karachi Stock Exchange (KSE) ended lower Monday, on sentiment dampened by an announcement made on Friday in the national budget for the fiscal year 2011/12 (July-June) that capital gains tax (CGT) would still apply to individual investors.
Dealers said the losses were capped by investor interest in some sectors benefiting from the budget.
KSE benchmark 100-share index ended 0.20 percent, or 25.01 points, lower at 12,211.65.
Turnover rose to 95.85 million shares from 65.31 million on Friday.
"The market was expecting the removal of the CGT, which did not happen, so that had a negative impact today," said Sajid Bhanji, director at brokers Arif Habib Ltd.
"But the government reduced the excise duty on cement, which had a positive impact, and also it did not increase the rate of corporate tax on bank, as was expected, which is also positive for the market," he said.
Cement manufacturers were among the most active companies on Monday, with DG Khan Cement ending 1.22 percent higher at 24.97 rupees.
Dealers said they expected the market to remain steady in the near-term, before regaining positive momentum.
In the currency market, the rupee ended at 85.92/94 to the dollar, little changed from Friday's close, as dollar supplies matched demand from importers.
The rupee hit a record low of 86.50 last month, and dealers said the local unit may face some pressure in days ahead, amid increased demand for dollar for import payments and a bleak outlook.
The rupee has lost more than 1.5 percent of its value since then, almost the same as its total loss of 1.53 percent in 2010.
In the money market, overnight rates ended at 12.25-12.75 percent, slightly lower than Friday's close of 13 percent, dealers said.
Copyright Reuters, 2011
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