Stocks up; rupee firms; overnight rates down

KARACHI: Pakistani stocks ended more than 1.3 percent higher on Tuesday led by buying in blue chip companies such as Pakistan Oilfields (POL) following a rise in international oil prices, dealers said.

Global oil prices rose on Tuesday from a dive to a four-month low in the previous session as the euro gained against the dollar ahead of a confidence vote in Greece aimed at avoiding a messy default of its sovereign debt.

US crude for July delivery rose 93 cents to $94.19 a barrel by 1015 GMT. On Monday, it hit $91.14, its lowest level since late February. The contract expires later on Tuesday.

"Bullish activity, lead by oil sector scrips was witnessed in an oversold market, amid thin volumes," said Ahsan Mehanti, director at Arif Habib Investments Ltd.

The Karachi Stock Exchange's benchmark 100-share index ended 1.32 percent, or 160.16 points, higher at 12,326.14.

Turnover rose to 68.17 million shares, compared with 51 million shares traded on Monday but still lower than the daily turnover which 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.

POL ended 3.21 percent higher at 358.50 rupees.

In the currency market, the rupee firmed to 85.65/70 to the dollar, from Monday's close of 85.75/80, 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 lower at 13.00 percent, compared to the previous day's close of 13.75 percent as dealers said there were some payments of circular debt that came in the market.

Copyright Reuters, 2011