1,578 points wiped out from KSE 100-index in 12 sessions

KARACHI - Karachi Stock Exchange-100 index has lost 1,578 points in the last 12 trading sessions amid prevailing political uncertainty in shape of impasse over the restoration of deposed judges, concerns on the economic fronts including a weak rupee coupled with ejection of foreign investment.

The total capitalization of the market declined by 306 billion and the total volumes of the market fell 76.23m in the period under review. The benchmark KSE-100 index has weakened over the few days, registering a drop of 311 points on Monday.

Analysts were of the view that market will remain range bound by the coming budget as the uncertainties regarding the imposition of capital gain tax and the other features of the budget still looming a head on the market.

After 34 years the stock market is likely to receive the jerk of capital gain tax in the month of July, as reports from reliable corners suggest that current government has chalked out a plan to impose capital gain tax. That will certainly not take the market soaring upward but analysts believe that  once the market pass through the uncertainty of the capital gain tax the market will again manage to recuperate.

Brokers were jubilant over the joining of Shaukat Tarin, President of Saudi Pak Commercial Bank in the budget advisory committee, as it is being expected that Tarin will advice friendly policies for the stock market.

Analyst said that the announcement of PML-N leaving the coalition, though largely absorbed by the market, still result in a one-off negative impact in the short run. In the long run though, strong earnings growth along with cheap multiples will ensure market remains attractive for investors once political stability arrives on the scene.

More than the S&P rating cut, another negative development is the weak outlook for Pakistani investment bond in international market because of a sharp increase in the spread due to deepening uncertainty.

The current economic situation of the country has shattered the confidence of foreign investors and it is believed that local investors are also no longer in position to boost up the market under the deteriorating economic conditions of the country, as the inflation is at its highest in more than three decades, the current account gap has widened, and government spending has caused the budget deficit to balloon.

"We are witnessing foreign selling everyday and it will probably add more pressure on the stock market," analysts said.

However, analysts pointed out a positive aspect for the stock market and the deteriorating economic condition of the country that is the recent meeting of the President George Bush and PM Yousuf Raza Gillani, which paved the way for more foreign funds for the country to tackle the food and energy crisis.

The flop side of the latest development was that, as soon as PM Gillani met President Bush, the country has again faced bomb blast after a long period.