LSE equities suffer losses

With the down-drift continued on the Lahore Stock Exchange (LSE), share values underwent further battering and the LSE index plummeted by 161.23 points or 3.8 percent amid a visible surge in volume, indicating improving interest in the market. The LSE-25 index closed at 4079.85 points as against its last weekend closing at 4241.08 points. The volume was, however, more than double of the previous closing session, mounting to 26.420 million shares from 11.823 million shares.
Despite the news that the banks have pledged to provide finances to bail out the market from the current crisis, there was little change in the market trend.
According to media reports, a consortium of banks has arranged Rs 19 billion to end the KSE crisis.
There was also a report in a national daily that in a meeting held at Karachi between the KSE members and the Securities and Exchange Commission of Pakistan (SECP) Chairman, it was resolved that the KSE will transfer funds amounting to Rs 35 billion in ready market as well as Rs 11 billion in the futures market. Due to such steps, there were high hopes for a recovery on Monday, but the situation continued to be dismal. Analysts, however, said that improvement in volume indicated such moves had started working, but added the market will take few more sessions to turn normal.
On Monday, the interest was seen in banks, which recorded gains, but due to locks in OGDC, NBP and PPL, no change in the trend took place, a broker said.
Bank of Punjab, MCB and Adamjee Insurance were among gainers, while Engro Chemical, Fauji Fertiliser and Union Bank suffered losses.
Though the index continued downward trend showing no respite in the crisis emerging on 16th of this month following problems in settlement of futures contracts for the month of March, volume showed a sizeable improvement, which raised investors hopes for an early reversal of the trend, stock analysts said.
Mirza Muhammad Irfan, equity research head of Capital Vision Securities Ltd, said the market stayed in negative zone throughout the session. However, at one stage the TV screens showed the market in positive column, but it happened due to some technical fault, as after some time it was again seen in negative zone with a loss of 150 points, he added.
OGDC, NBP and PPL continued to be locked at lower levels, while small shares, especially banks posted gains. Kapco also turned up and was locked at its upper level.
Among key shares MCB, Hub Power, PSO were directionless, while OGDC and NBP remained capped for the eight consecutive sessions, he pointed out.
Irfan said that the market failed to stage recovery despite SECP measures, which panicked small investors who have been the hard hit by the current crisis.
According to him, the present crisis emerged due to deliveries in futures, therefore, in his view this practices should not be allowed to avert such a situation in future. There should also be a limit for badla in Lahore, as is the practice in Karachi, he suggested.
He said there is no restriction on COT, therefore, it went up by 920 percent on last Friday in Lahore. About the settlements, he said despite special badla sessions on the KSE all the positions in futures have not been settled due to which the market continued sliding on Monday. Now the banks and DFIs must come forward to inject funds in the market to resuscitate it.
He also proposed that the SECP should investigate the crisis and the elements responsible for it must be taken to task.
"We have never witnessed such a crisis in last 19 years in the stock market", Irfan said, adding that the SECP must not introduce any new rules without taking the stakeholders into confidence.
He said that losses could have been averted by suspending trading in the market. About the future of the market, he said now all eyes are on NBP and OGDC, and if they start improving, the trend will be followed by rest of the market too.
In all 73 Scripps changed hands on the day, of which 17 were up, 17 went down while 39 remained unchanged.
Bank of Punjab was up by Rs 3.60, MCB Rs 3.40, Adamjee Insurance Rs 2.00, Bosicor Pakistan Rs 1.05 and Fauji Cement 90 paisa.
In minus column, Engro Chemical shed Rs 7.05, Fauji Fertiliser Rs 7.60, Union Bank Rs 1.65, Pioneer Cement 70 paisa, and Chakwal Cement 65 paisa.