Stocks, o/n rates end lower; rupee firms

KARACHI: Pakistani stocks ended almost 1.6 percent lower on Monday, led by selling of Engro Corporation amid uncertainty over the nation's gas supply, dealers said.

There are risks with regards to gas supply from Sui Northern Gas for Engro's new plant worth $1 billion, the world's largest single-train urea ammonia plant.

"Uncertainty of gas supply to Engro $1 billion plant forced institutional investors to trim their positions in the company," said Samar Iqbal, a dealer at Topline Securities Ltd.

The Karachi Stock Exchange's benchmark 100-share index ended 1.58 percent, or 195.33 points, lower at 12,165.98.

Turnover was only 51 million shares, compared with 47.67 million shares traded on Friday. Daily turnover is usually on average around 100 million shares.

Dealers said there was lack of interest in the market because of the continued implementation of a capital gains tax.

The government confounded market expectations earlier this month by not removing the capital gains tax on certain investments in the 2011/12 budget, announced on June 3.

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

Engro ended 4.99 percent lower at 168.90 rupees, while Sui Northern shed 4.98 percent to close at 21.20 rupees.

In the currency market, the rupee firmed to 85.75/80 to the dollar, from Friday's close of 85.87/92, amid lack of import payments.

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

According to official data, remittances crossed $10 billion for the first time, hitting $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 ended at 13.75 percent, compared to Saturday's close of 13.90 percent and dealers expect rates to remain on the higher side due to year end payments.

Copyright Reuters, 2011