The badla investment at Karachi Stock Exchange (KSE) rose by 9.4 percent last week while rates stayed on their upper limit of 18 percent because of rise in equity prices and lenders' reluctance to release funds. The badla investment rose by 9.4 percent to Rs 35.8 billion at the end of the week, compared to Rs 32.7 billion on the last trading day of previous week, according to a research report prepared by Invest Capital and Securities.
Faisal Jiwani, an analyst at InvestCap, said that investment in carryover trade kept rising slowly where the financing was being done on the upper limits of 18 percent, as funds were not readily available for many potential borrowers.
Jiwani said the major reason behind the stability in the carryover rates on higher side was low availability of funds. It seemed result of unwillingness of carryover trade financers to provide financing at even 18 percent.
After a declining trend during previous week, investment in carryover trade had again started to rise along with the market over last week. The major reason behind the increase in investment was increase in trading volume in carryover transactions and due to increase in stock prices.
Trade volume in carryover market appreciated 7 percent with financing of 441 million shares as against 412 million shares done in previous week, providing leverage to the average rates at KSE.
The average carryover rates at Lahore Stock Exchange declined by 210 basis points despite increase in investment and trading volume. The average rollover rates at LSE declined from 33.3 percent to 32.2 percent at the end of last week.
Investment in carryover trade at LSE increased 8.3 percent to Rs 5.2 billion from Rs 4.8 billion. The carryover trade volume at LSE also increased 6.5 percent to 76.9 million shares from 72.2 million shares financed last week.
Picic exited carryover trade last week in line with the phasing out of carryover trade with margin financing. This stock was the first to exit the list this month, while another set of three scrips is scheduled to exit the list during this month. They are Sui Southern Gas Company, Nishat Mills and Lucky Cement. During last month four stocks left the list of items that are eligible to be traded at carryover market.
Pakistan State Oil was the most traded stock accounting for 16.4 percent of the carryover trade with average investment of Rs 5.72 billion. Oil and Gas Development Company and Pakistan Oilfields attracted investments of Rs 4.4 billion and Rs 4.3 billion, respectively, during the week.
Pakistan Telecommunication, D G Khan Cement and National Bank also remained active in the carryover trade. Jiwani said that the carryover trade borrowers would continue to face high rates of borrowing this week.
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