Firm trend on LSE

Share values depicted firmness on Lahore Stock Exchange (LSE) during the last week with a range-bound activity, resulting from quandary over badla transactions issue and above all inquisitiveness among market players regarding outcome of the report of Task Force formed by the Securities and Exchange Commission of Pakistan (SECP) to determine the causes of March crisis.
In view of above reasons, activity remained low during the whole week, as anticipation that the Task Force report might reveal names of some big guns, who played a key role in the March stock market crisis, experts said.
The submissions of the Task Force chairman to SECP remained favourite subject of discussion of the stockbrokers and all others concerned. A broker said that scared by the contents of the report, which are yet to be disclosed by the SECP, big players stayed on sidelines that resulted in thin activity, which was evident from the low volume.
According to market pundits, there was nothing wrong with fundamentals of the market, while there was also no negative news from the economic front, but the SECP stubbornness with regard to restoration of badla issue was a matter of grave concern, and was responsible for liquidity problem in the market.
Overall the LSE-25 index recorded an increase of 54.49 points or 1.44 percent during the week under review to end at 3828.33 points as against previous 3773.84 points. Similarly, there was no change in the overall turnover, which at the end of the week, stayed at 32.787 million shares compared with 31.696 million shares of the last week, showing a little increase of 1.091 million shares or 3.44 percent.
According to stock analysts, the market remained stable during the week, and it did not even pay much attention to the London bomb explosions that claimed 50 lives of innocent people. This shows that fundamentally the market is strong and there is no disturbing factor barring reasons relating to badla and margin financing.
The start of the week was not good, as the market took a negative start with low activity. Seeing no breakthrough in restoration of badla, the people were disappointed due to which activity remained very thin. The LSE-25 index lost 39.84 points or 1.05 percent, descending to 3734.00 points from 3773.84 of the previous session. The volume was very low and at the final count, was registered at 22.364 million shares compared with 31.696 million shares, showing a fall of 9.332 million shares or 29.44 percent.
In reaction to the news of fire incident at a storage shed of PSO lubricant manufacturing terminal, the market opened with a bearish note, and subsequently moved up and down amid a very low activity. However, later some interest was seen in oil and cement sectors, but overall sentiment remained negative, stock analysts said.
The banking sector portrayed a mixed picture, as MCB attracted fresh buying, while Bank of Punjab and National Bank showed weak signs.
In the oil sector, PPL and in the cement sector Chakwal Cement turned out to be major gainers. The market, however, changed the trend on Tuesday when buying spree in petroleum and banking sectors helped equities register gains across the board on account of prospects of restoration of COT.
The LSE-25 index improved by 78.85 points, closing at 3812.85 against 3734.00 of Monday, while trading volume increased to 30.285 million shares as compared to 22.364 million shares traded a day earlier. PSO, OGDC, PPL, Fauji Fertiliser, Kot Addu Power Company, Askari Commercial Bank, Muslim Commercial Bank, and Faysal Bank aided the market sentiment.
On Wednesday, the market moved erratically, while last minute profit-selling dragged the index in negative column following no development on the issue of margin financing. The LSE-25 index closed at 3808.20 points as against 3812.85 of the previous session, registering a fractional decline of 4.65 points. The volume, however, posted a significant improvement reaching 55.804 million shares compared with Tuesday's 30.285 million, registering an increase of 25.519 million shares.
The market was positive in the morning and initially it maintained overnight bullish tendency following fresh interest in selective chips, which kept the index in the positive zone. However, thereafter in second half of the session, heavy profit-taking took place, which washed away all early gains and eventually the market ended with a fractional decrease.
Activity was also sluggish on Thursday, as people showed no interest in trading, however, the index managed positive closing because of some interest in selective chips. The LSE-25 index was up 23.45 points or 0.61 percent closing at 3831.65 as against 3808.20 of the previous session. Overall turnover lowered to 37.629 million shares from 55.804 million shares of Wednesday, registering a decline of 18.175 million shares or 32.56 percent.
The share market remained stable on the last day and even it ignored the London blasts incident killing scores of people, however, activity remained range-bound with equities moving up and down, while the benchmark index ended with a nominal decline, which closed at 3828.33 points compared with 3831.65 points. The volume was also slightly down to 32.787 million shares from 37.629 million shares.
According to stock analysts, all key players, including institutions had a careful approach, and adopted a 'wait and see' policy due to confusion over the badla and margin financing issue, which lowered activity in the market.
Mirza Muhammad Ejaz Baig, director, Capital Vision Securities Ltd, said the market performed well during the week following expectations of restoration of badla and even discounted the sad news of London blasts.
He said that on Friday all the world stocks and currency markets and oil markets crashed in reaction to London incident but Pakistani capital market was not affected by it. Moreover, the hopes of corporate results and payment by the buyers for the NRL were also positive factors. He, however, pointed out that because of gradual phase out of badla and in absence of any alternative arrangement, the market is facing liquidity crunch, which is a very bad sign. He said without making arrangements for liquidity financing badla phase out will have disastrous effects on the capital market.
He also said that the proposal of the LSE for parallel running of badla and margin financing and the KSE resolution in which they refused to phase out badla from now onward have raised hopes for the settlement of the outstanding issue.
The KSE has taken a very tough stand on the issue of badla, which means they have got some sort of commitment form the high ups of the government for either restoration of badla or running it parallel with the margin financing till the latter becomes popular among the stakeholders, he added.