Sharp rise in profit taking in the KSE

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KARACHI: The Karachi Stock Exchange exhibited profit taking at inflated levels as investors preferred to book gains following FBR’s announcement to impose a one time flood surcharge of ten percent on collection of Capital Gains Tax (CGT). However, the mechanism for the applicability of this has not been mentioned in the Finance Amendment bill.
The KSE100 index closed at 11154.83 after it lost 16.26 points, while the KSE 30 index closed at 10768.51 following a loss of 54.11points. All share index closed at 7830.50 points after losing 8.30 points. 180 scrips advanced, 191 declined and 25 remain unchanged out of total 396 scrips. Total volumes stood at 153.97 million against the previous 155.11million, while 52-week average volume stood at 119.28 million.
Brisk activity was seen in NML and ANL after cotton prices continued their downward trend in the global markets. Foreigners were sellers in banking scrips, whereas locals were sellers of energy scrips. All top shelf securities PTC, OGDC, FFC, PPL, POL, ENGRO, PSO, HUBC, NBP, MCB, NML and FFBL aided the bourse onto a slow upward movement, but buoyant interest backed by little attention from foreign investors further fuelled Benchmark100 to summit the high of 11262.60 up 57.76 points.
However, higher end saw punters, jobbers and institutions on the fore as they preferred to book profits at the upper end, this pressure skewed the bourse south to end the day down -16.26 at 11154.83. According to Abbas Raza at HMFS, the KSE100 seems to have the strength to touch 11,375-11,450 level, but near to this scenario, the benchmark100 may face volatility causing adverse excursion, therefore, caution is advised with a shopping interest in core pivotal’s upon correction.
On the economic front, monetary policy statement is expected on November 29, 2010. The interest rate is likely to notch up by another 50bps-75bps to 14.0 percent to 14.25 percent. It is plausible that inflation of 14.17 percent is likely to notch following an increase in power tariff, oil prices and other perishable food prices is incorporated during the current month. Any upward revision in interest rate may adversely effect the northbound direction of the stock market.
While the benchmark sustained positive stance initially the low volume stocks kept the turnover alive and though selective main board stocks did invite cautious accumulation from corporate corridors on dips, the day traders seemingly avoided making fresh intra-day bets the keeping the frontline stocks under pressure mainly due to off-loading by the resident participants from both corporate and retails fronts.