Stocks, o/n rates down; rupee flat

KARACHI Pakistani stocks ended at their lowest level this year on Tuesday as investors remained cautious ahead of the 2010/11 budget, due to be announced on Saturday, dealers said.

However the market regained some of its early losses as investors bought shares when the index went below 9,200 points.

The Karachi Stock Exchange (KSE) benchmark 100-share index fell 0.35 percent, or 32.34 points, to end at 9,294.18 points on turnover of 94.12 million shares. The intra-day low was 9,164.40 points.

The KSE-index ended at 9,233.60 points on Dec. 21, 2009.

“Market opened with selling pressure across the board but some institutional buying was seen at lower levels,” said Furqan Punjani, an analyst at Topline Securities Ltd.

As part of its new budget, the government is expected to impose a capital gains tax on the purchase of stocks made on or after July 1.

The rupee ended flat at 85.45/50 to the dollar, unchanged from Monday”s close.

Dealers expect downward pressure on the currency from import payments and from exporters holding onto dollars, at least until the announcement of the budget.

The rupee has lost 1.40 percent against the dollar this year after losing 6.17 percent last year and 22.12 percent in 2008.

In the money market, overnight rates fell to 9.75 percent, from Monday”s close of 12.40 percent after the central bank conducted a reverse-repo and bought back 17.95 billion rupees of government paper to inject liquidity in a tight money
market.

The next inflow of 85 billion rupees ($995 million) is scheduled for June 3. Dealers said they were waiting for the treasury bill auction due on Wednesday with a target of 90 billion rupees ($1.05 billion).