Budget proposals from the government with the expected introduction of Reformed General Sales Tax (RGST) and the Wealth Tax along with an increase in corporate tax rate kept a high level of uncertainty amongst investors.
The KSE-100 index closed at 11,916.02 with a loss of 38.35 points and total volume stood at 31,743,533 along with the total value of 1,388,995,795. The All Share index closed at 8,342.09 after losing 25.71 points. A total of 113 scrips advanced, 162 declined and 90 remain unchanged out of a total of 365 scrips traded.
Better than anticipated first quarter results in the case of Fauji Fertilisers Bin Qasim (FFBL) with EPS of Rs 1.67 along with a first interim dividend of Rs 1.25 per share failed to lift the market. The stock closed down 0.8 percent while FFC also remained out of favor despite expectations of a better result in the first quarter of 2011. In the case of cement, Dera Ghazi Khan Cement (DGKC) announced 9MFY11 EPS of Rs0.40, with a loss per share of Rs0.03 in third quarter which was lower than expected by the market. DGKC ended the day down 3.3 percent while Lucky Cement closed down 1.3 percent.
Extended selling in high priced stocks had a stronger impact on the local bourse due to future roll-over and low volumes, thus pushing the benchmark in deep red during initial trading hour while speculative recovery in the case of index heavyweight OGDC supported by value buying in handful main board stocks offering consistent dividend yields did allow the benchmark to recover early losses.
Budget leaks suggesting the introduction of new taxes and increase in existing taxes have reduced trading as the majority of participants await the announcement of the budget. It is hoped that the materialisation of government’s plan for resolving circular debt and revamping of oil and gas exploration sector might offer an interim trigger, while market men await the federal budget for the next fiscal year. Hasnain Asghar Ali at Aziz Fidahhusein said that caution is likely to prevail with mild accumulation in safer stocks, with certain companies facing high input costs and low demand, high debt and limited power, while some are also likely to witness an increase in existing taxation.
KSE investors cautious
