Despite a positive gesture from the Securities and Exchange Commission of Pakistan (SECP), capping the badla rate, the share market on Monday, just before the close of the session, received selling pressure on rumour that NSS rates would be increased.
The KSE-100 index dropped 34.66 points, or 0.46 percent, to 7554.28 as against 7588.94 of Friday. The volume amounted to 216 million shares as compared with 173 million shares.
In response to the decision by the stock market regulator, suspending badla financing up to Rs 12 billion, the KSE 100 index opened on a positive note making its day's high at 7679 level gaining 90 points. Afterwards, rumour arrived in the market regarding the hike in interest rates for National Savings Schemes and the index started to plunge and closed the day in the negative column losing 35 points closing the day at 7554 level. All top-tier stocks closed the day in the negative column, led by OGDC and PTCL, except POL and PSO, which posted respective gains of Rs 9.4 and Rs 2.55.
Several traders were of the view that badla phase-out suspension is unlikely to have any significant positive impact on the market.
An analyst from First Capital said investors should adopt cautious approach, as the market is likely to remain volatile in the near term. "However, corporate earnings season is likely to fuel some positive sentiments in the market and we advise investors to restrict their investments to fundamentally strong scrips, including POL, FFC, FFBL and NBP."
Despite a positive start, the market observed a mixed trend. An analyst from Atlas Investment Bank said the news of COT phase-out failed to restore investors' confidence as they indulged in profit-taking.
Consequently, all market movers, mainly PPL, OGDC, PTCL and NBP, fell by a considerable margin, contributing 22.5, 20.3, 3.4 and 3 points fall, respectively.
The major reason for the fall in the index was the high possibility of rise in the rates of NSS. The scrips, which appreciated in value, were POL and PSO, gaining Rs 9.5 and Rs 2.5, respectively.
Another rumour regarding the separation in trading of regular and futures scrips demoralised investors from taking fresh positions.
Hasnain Asghar from Aziz Fidahusein said that the expected annual and bi-annual results justify an extended bull-run. Inconsistency in policy framework continues to force recommendation to wait for dips for placements while low volume surge should be capitalised. Technically, the index would continue to face resistance around 7570-7577 while support stays around 7450-7457. The flexibility, shown by SECP by suspending the weekly badla, has further increased hopes of market pundits of acceptance of a COT-17 market, accompanied by more modes of financing, apart from margin financing. It is, however, recommended to wait for confirmation before taking fresh trading positions.
The market was under pressure after a rumour that some big guns or companies were in the process of suing PTCL for the termination of Internet link for such a long time.
OGDC lost Rs 1.15 to Rs 107.60 on a volume of 47 million shares. PTCL fell 20 paisa to Rs 64 on turnover of 30 million shares. NBP suffered a decline of Rs 1.40 to Rs 108.40 on deals of 20 million shares; Pakistan Oilfields climbed to Rs 307.80 from Rs 298.40 on trading of 19 million shares; and PSO gained Rs 2.55 to Rs 387.75 as around 14 million shares changed hands.
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