Local stocks, o/n rates end lower; rupee weakens

KARACHI: Pakistani stocks ended lower on Tuesday on thin volume as investors remained on the sidelines amid the lack of any positive triggers, dealers said.

The Karachi Stock Exchange's benchmark 100-share index ended 0.12 percent, or 15.42 points, lower at 12,337.94.

Turnover fell to 54.17 million shares from 63 million traded on Monday.

"Volume remained extremely low in the absence of any triggers and investors have now realised that there is barely any probability that the government may revisit the capital gains tax issue," said Samar Iqbal, a dealer at Topline Securities Ltd.

The government confounded market expectations when it did not announce a removal of a capital gains tax in the 2011/12 budget, which was unveiled this month.

A 10 percent capital gains tax is imposed on stocks held for six months or less and 7.5 percent on stocks held between 6 months to a year.

Dealers said this has affected the volume of trade.

In the currency market, the rupee weakened to 85.75/79 to the dollar, compared with Monday's close of 85.65/70 following a rise in international oil prices.

The rupee hit a record low of 86.50 last month, but dealers said the local unit may be stable in the coming days because of increased remittances from Pakistanis working abroad.

According to official data, remittances sent by overseas Pakistanis crossed $10 billion for the first time and were recorded at $10.1 billion in the first 11 months of the 2010/11 fiscal year, an increase of 25.20 percent compared with the same period last year.

In the money market, overnight rates fell to 11 percent, compared with the previous day's close of between 11.45 percent and 12.15 percent and dealers said they were awaiting the treasury bill auction scheduled for Wednesday but did not expect any major changes in the cut-off yields.

Copyright Reuters, 2011