| GEO Business|
| KSE ends lower in cautious trade|
| Updated at: 1603 PST, Monday, June 28, 2010|
KARACHI: Pakistani stocks were again lacklustre on Monday with the index ending lower as most investors chose to remain cautious ahead of the fiscal year-end and in the absence of any major trigger.
The Karachi Stock Exchange's (KSE) benchmark 100-shareindex fell 1.28 percent, or 125.30 points, to close at 9,671.55.
Turnover was 81.65 million shares, compared with 89.16 million shares traded on Friday.
"Trade has been dull in the last few days as there has been no trigger for the investors and they don't want to take too much of a risk ahead of the year-end," said Khalid Iqbal Siddiqui, director at Invest and Finance Securities.
Pakistan's fiscal year runs from July 1 to June 30.
Dealers said uncertainties over the implementation of a new capital gains tax from July 1 has discouraged investors, particularly retail traders, in the past few days, resulting in lower trades.
In its budget for the 2010/11 fiscal year, the government announced that a capital gains tax of 10 percent would be imposed on stocks held for six months or less and 7.5 percent on stocks held between 6 months to a year from July 1.
Dealers said the government had previously agreed with the exchange that the capital gains tax would be levied only on profits made from the start of the 2010/11 fiscal year on July1.
But now there are concerns the government may seek to tax gains made before that date and demand quarterly tax returns instead of the annual filing preferred by brokers, they said. A visit to the stock exchange by Finance Minister Abdul Hafeez Shaikh during the day also failed to lift sentiment in the absence of any concrete outcome, dealers said.
Trade volume is likely to pick up once a decision if the Securities and Exchange Commission of Pakistan (SECP) decided to reintroduce margin buying.
The KSE authorities and the regulator met last week to discuss margin buying and other leveraged products, and decided to form a committee which is required to submit its recommendations within 15 working days.
In the currency market, the rupee ended at 85.40/45 to the dollar, down from Friday's close of 85.31/36.
Dealers said dollar inflows are normally lower on Monday, which led to the easing of the rupee. However, they said the local unit was expected to stay steady near-term.
In the money market, overnight rates remained lower at 9.5 percent, and dealers said rates were likely to remain low as the market was pretty liquid at the moment.