On Friday, December 16, 2005, BRIndex30 closed at 10,117.47 with a net change of -18.48, and turnover was 337,220,400.
On that same day, the KSE-100 closed at 9,514.83 with, a change of +26.13, and the turnover was 348,642,940.
The KSE-AllShares on that same day closed at 6,404.80, with a change of +13.50, and turnover was 417,601,900.
The reason for the difference between the directions of the two indices are that BRIndex30 consists of 'Top 30' most traded companies, and uses only tradable shares (CDC Shares) for market capitalisation, while KSE-100 consists of 100 'Sector Leaders' and companies leading on the basis of Market Capitalisation, without considering the amount of 'Free Float' and 'Blocked' shares.
As mentioned earlier, KSE-AllShares total turnover was 417,601,900, and KSE-100 turnover was 348,642,940. BRIndex30 turnover was 337,220,400, which is 96.72 percent of KSE-100 turnover, and 80.75 percent of KSE-AllShares turnover, again confirming the strength of BRIndex30, to reflect the true trend of the market.
Let us examine the 'Five Top Traded' companies of December 16, 2005. These companies are included in both BRIndex30 and KSE-100 Index.
TABLE 1:
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Name Market Capitalisation Market Capitalisation Change KSE CDC Shares Blocked Net Shares
2005-12-16 2005-12-15 Shares Shares
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MCB 72,617,192,000 73,406,278,000 -789,086,000 426,532,700 345,717,550 6,241,088 339,476,462
NBP 115,696,791,000 113,362,764,000 2,334,027,000 590,892,700 133,057,796 133,057,796
OGDC 501,703,298,000 500,628,066,000 1,075,232,000 4,300,928,400 199,844,174 199,844,174
PTC 243,045,600,000 242,102,100,000 943,500,000 3,774,000,000 577,549,726 577,549,726
Nestle 34,821,935,000 33,520,075,000 1,301,860,000 45,282,100 7,240,188 7,240,188
PIAA 19,248,627,000 18,918,179,000 330,448,000 1,652,242,700 175,086,732 175,086,732
SNGP 35,317,452,000 34,344,038,000 973,414,000 499,186,600 253,493,478 253,493,478
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Volume %age of BRIndex30 Volume
As against KSE Indices
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KSE 100 348,642,940 96.72371395
KSE All Shares 417,601,900 80.75164409
BRIndex30 337,220,400 100
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It can be concluded by observing the above table, that out of these 'Five', only MCB has a negative Market Capitalisation Change, whereas the rest have all increased.
If we combine this increase with the huge difference in Tradable Shares (CDC Shares) and Shares included in KSE, we can see that a large percentage of this positive change is false, as all Shares included in KSE Indices are not tradable. Moreover, these same large number of shares are affecting the two indices due to their unusually high market capitalisation, which is depicting an incorrect direction of the market.
Apart from these 'Top Four Companies' that have gone up, there were other companies whose market capitalisation had increased and they, too, had contributed their unusual high market capitalisation in the net increase in KSE-100 and KSE-AllShares Indices.
At the moment, we will present one example ie, of Nestle, which is included in KSE-100 but not in BRIndex30 and had very low turnover of 300 shares on December 16, 2005, and was also the second largest gainer that day, but its market capitalisation increased by 1,301,860,000.
A few days earlier, cement and banking sectors were market leaders, but on December 16, 2005, due to huge profit-taking in cement and banking sectors, BR Cement Index fell 50.44 points and BR Commercial Banks Index gained a meagre 1.29 points. And, at the same time, one more sector closed in the negative ie, BR Power Generation & Distribution Index. It closed with a net change of -3.94 points.
TABLE 2:
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Name Market Capitalisation Market Capitalisation Change KSE CDC Shares Blocked Net Shares
2005-12-16 2005-12-15 Shares Shares
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Nestle 34,821,935,000 33,520,075,000 1,301,860,000 45,282,100 7,240,188 7,240,188
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