KARACHI (Reuters) - The stock market fell on Tuesday on news that Finance Minister Shaukat Tarin was stepping down and confirmation a 10 per cent capital gains tax will soon be put on the purchase of shares, dealers said. Tarin knows and understands the market well and theres a bit of uncertainty about who will replace him, said Sajid Bhanji, a dealer at brokers Arif Habib Ltd. The Karachi Stock Exchange benchmark 100-share index ended 1.30 percent, or 129.50 points, lower at 9,823.57 on turnover of 130.74 million shares. Dealers said the market was also under pressure because of an announcement an initial 10 percent capital gains tax will be imposed on the purchase of stocks made on or after July 1 and which are held for six months or less. The tax will be 10 percent for two years on stocks held for less than six months, and 7.5 percent on stocks which are held for more than six months but less than a year, the KSE said in a statement late on Monday. After two years, the tax will be increased by 2.5 percent annually, and will be imposed on stocks held for less than six months, bringing the final rate to 17.5 percent, the KSE said. For stocks held for more than six months but less than a year, the tax will be increased by 0.5 percent annually, bringing the final rate to 10.0 percent, it said. The imposition of the capital gains tax on the purchase of stocks was expected, dealers said. But the KSE had earlier recommended a 5 percent capital gains tax in the 2010/11 fiscal year, which would go up gradually to 10 percent by 2014/15. Investors had not anticipated the 10 percent rate from the outset, dealers said. OUR STAFF REPORTER adds: The KSE 30-index closed at 10239.83 with a loss of 126.78 points. The KMI 30-index closed at 14471.19 with a loss of 167.70 points. All shares index closed at 6968.35 with a loss of 89.51 points. Trading activity was better as compared to the last trading session as the ready market volume stood at 171.670m as compared to last trading sessions 135.843m. Future market volume, however, stood at 3.496mn shares as compared to 2.787m shares of last trading session. Market capitalization stood over Rs2.823tr, as total trades increased to 99,632 as compared to last trading sessions 94,715, while 115 companies advanced, 270 declined and 18 remained unchanged. Highest volumes were witnessed in JSCL at 22.191mn closed at Rs25.90 with a loss of Re0.94 followed by SILK at 13.960m closed at Rs4.23 with a gain of Re0.83, NBP at 13.799m closed at Rs88.50 with a gain of Re0.57. Ahsan Mehanti at Shehzad Chamdia said, 'News on Finance Ministers resignation invited panic selling during the session despite strong result announcement expectations in the banks, insurance sectors. The fertilizer sector was seen moving in the red zone with Engro and FFC turning south, while FFBL showed meager gains. Advance to decline ratio is indicative of weakened bearish sentiment consequently market is expected to witness pull back as investor rush to capitalize on opportunities before the implementation of CGT on July 01 this year. Some news that affected the trading activities were: brokers consent to 10 percent CGT; Oil import bill up 70.4 in Jan YoY; OGDC discovers hydrocarbon reserves; Jan textile exports increase 23.9pc YoY; and NSS bonds trade at KSE in March. Hasnain Asghar Ali, a market expert, said, With local bourse already suffering due to high impact cost and lack of price discovery, which has kept the trading multiples restricted on lower side, mainly due to absence of flexible ready board leverage mechanism, yet another attempt to increase trading cost, is fatal. The rising trend in the international oil prices certainly poses a threat on the local inflationary pressures, while absence of dynamism in policies have made the rising trend in international oil and other commodities prices directly proportionate to inflation and input cost, he added.