KARACHI, June 4: The Karachi Stock Exchange (KSE) 100-share index roared back to its pre-reaction level on Wednesday and surged by 4.89 per cent or 610 points on heavy buying triggered by a two-year extension in the Capital Gains Tax exemption and status quo on the Capital Value Tax.

It was virtually a run-up on heavy covering purchases in the index heavy base shares and finished close to the session’s high of 13,089.50, up 4.89 per cent or 610.03 points, recouping a massive amount of Rs185.479 billion to add to the market capital at Rs4,037.850 billion. The surge reflects that the market’s inherent strength is at work now.

The free float 30-share index on the other hand recovered 723.34 points or 4.94 per cent at 15,361.89.

“The new regime has given its pre-budget maiden gift to the investors well above their demand,” analyst Faisal A. Rajabali said, adding: “the demand was one year’s extension, but they made it for two years and all cheers for the new economic managers”.

The massive rise of 610.03 points, which allowed the market capital to recoup about Rs185.00 billion was, however, not all-time single session record as it was set on Jan 3, this year at 643.04 points at 13,996.42 after the postponement of elections from Jan 8, to Feb 18, owing to tense situation and fears of bloodshed after the assassination of Benazir Bhutto on Dec 27, 2007.

“The market’s massive run-up in the backdrop of some political irritants signals that there can be more pleasant surprises for stock traders, including no new tax followed by a rigid status quo,” another analyst Hasnain Asghar Ali predicts.The market, which has been awfully weighed during the last month and had lost about 2,000 points or nine per cent is expected to be in its real self at least during the pre-budget sessions, he added.

“Investors who had been in the mourning mood after the successive market crashes during the last month welcomed the tax exemption as was reflected by heavy covering purchases on all the counters having potential of capital gains at the current lows,” analyst Ahsan Mehanti said, adding: “oil, bank, cement, and blue chips on the other counters rose sharply but without matching selling from any quarter.”

The general perception is that the current buying euphoria could be sustained during the pre-budget sessions as major investor worry on the capital gain tax which has been removed and that is perhaps why sellers kept to the sidelines anticipating s further rise in share values.

Upper locks were witnessed on most of the blue chips, top gainers were led by Nestle Pakistan and AKD Capital, up by Rs57.49 and Rs51.49 followed by Shell Pakistan, PSO, Pakistan Oilfields, Millat Tractors, Dawood Hercules, Engro Chemical, Colgate Pakistan, Pakistan Services, EFU General and Life, Attock Petroleum, MCB Bank, Lakson Tobacco, and several others, up by Rs14.39 to Rs29.50.

Prominent losers were led by Siemens Pakistan and HinoPak Motors, off by Rs65 and Rs26.99, respectively. Others fell modestly under the lead of Bolan Casting, Gillette Pakistan, Indus Dyeing.

Trading volume rose to 205m shares from the previous 159m shares as gainers held a strong lead over losers at 349 to 39, with 14 shares holding on to the last levels. TRG Pakistan led the list of actives, higher by one rupee at Rs8 on 21m shares followed by OGDC, up by Rs6.22 at Rs130.72 on 9m shares, Hub-Power, steady by 59 paisa at Rs32.79 on 7m shares, Arif Habib Securities, higher by Rs8.28 at Rs173.98 on 7m shares and Fauji Fertiliser Bin Qasim, up by Rs1.72 at Rs36.12 on 6m shares.

Other actives were led by Norrie Textiles, higher by 52 paisa at Rs2.74 on 12m shares, IGI Investment Bank, up by one rupee at Rs10.17 on 11m shares, Dewan Salman, firm by one rupee at Rs6.45 on7m shares and Nimir Chemicals, up 79 paisa at Rs4.69 on 6m shares.

FORWARD COUNTER: Newly-listed Engro Polymer made its debut at the face value of Rs10 but steadily rose to close at Rs48.45 on 115.693m shares followed by OGDC, higher by Rs6.20 at Rs130.20 on 3.690m shares and NIB Bank, up one rupee at Rs13.75 on 2.356m shares.Bank of Punjab followed them, higher by Rs1.82 at Rs38.29 on 2m shares and Lucky Cement, higher by Rs5.61 at Rs117.81 also on 2m shares.