The badla rates increased by 190 basis points on the last session of the Karachi Stock Exchange, because of higher stock prices and pre-Eid massive withdrawals from banks, putting strains on the money market and pushing the overnight rates higher. The much-awaited correction came on Thursday, but only after a 390-point rally in first two days of the week. Badla rates remained on the higher side for the most part of the week.
The KSE-100 index saw its largest single day decline on closing basis on Thursday diving by 232 points but gained 135 points on Friday.
On weekly basis, KSE-100 Index increased by 240.93 points or 3.8 percent and closed at 6559.83 on Friday. Sentiments changed as market moved vigorously in both the directions on different rumours and stunned the investors. Even exciting seems to be a dull word for explaining the market trend during the last week.
Badla investment made a new high again of Rs 37.4 billion on Tuesday as the market gained 225 points on the same day.
The correction on Thursday eased off badla investment by Rs 2.5 billion but rates did not ease off as they did not reflect the price decline that took place on the same day (rates are based on the previous day's closing prices).
On week-on-week basis badla investment increased by Rs 751 million or 2 percent due to higher prices as badla volume was lower than that of the previous Friday.
On Friday Badla investment at the KSE amounted to Rs 36.7 billion compared to Rs 35.9 billion on previous Friday.
LSE badla investment also increased by 10 percent, to Rs 4.52 billion on Friday. Combined badla investment at two stock exchanges increased by 3 percent, from the previous Friday's level, to Rs 41.2 billion.
Badla rates remained on the upper side due to different reasons during the week. First two days witnessed rising rates due to positive sentiments and the enormous bull run, however on the next two days rates seemed high as due to non-availability of funds owing to withdrawals in respect of Eid and lower current prices.
On week-on-week basis weighted average badla rates at KSE increased by 190 basis points, to 17.9 percent.
Weighted average badla rates at LSE were 1590 basis points higher at 34.6 percent, from the previous Friday's rate.
Faisal Jiwani, research analyst from Investcapital Securities, said that even after a major correction in the market, badla rates did not ease off as low volumes indicated few people exited the market in the recent correction.
Badla rates are expected to remain on the higher side in the short term due to shortage of liquidity in the market in the pre-Eid season and hence no significant decline in badla rates is expected in the coming days.
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