The stock market fell sharply last week because of higher badla rates, indicating that presence of weak holders in the equity market had increased. The SBP circular for revaluation of PIBs also hurt investors' confidence over banks' earnings.
The equity markets remained under pressure during the last week where KSE-100 index declined by 1.2 percent, or 65.7 points, closing at 5388 level on Friday, July 16. Rising PIB yields and increasing badla investment were the main reasons for the negative trend. The average daily volumes increased by 7.78 percent on week-on-week basis to 294.50 million shares.
Nishat (Chunian), Bank of Punjab, Pak Services, Shell Pakistan, and WorldCall Communication were the major gainers while Pakistan Tobacco, Fauji Cement, Dewan Salman Fibre, Gatron Industries and Attock Cement were major losers at KSE.
The bonus speculation in PSO proved to be a trigger for the market with the index inching up by 0.59 percent on the very first trading day of the week. The rally proved short-lived as inflation data disturbed the debt market significantly on Tuesday. Bonds yields thus went up leaving stock market in uncertainty.
Wednesday was a positive day, with positive news flow from the oil and gas sector pushing the index up by 0.02 percent.
The SBP circular regarding IAS 39 implementation on PIBs jolted the market on Thursday. Banks were the losers while retail investors also en-cashed some of their holdings to raise cash for the PPL subscription.
Friday was the weakest day of the week with the index coming down nearly 1 percent to 5,387.84. The key concern was the debt market where the yields went up further in panic selling from banks.
Though the overnight market is quite liquid, badla rates may go up slightly owing to rising PIB yields. "We expect most companies to come up with the dates for their June 30 result announcements, which is likely to trigger some activity in respective stocks," said an analyst from KASB Equities.
"We also expect trading activity to improve in the provisional trading of PPL shares as most of the subscribers are unlikely to get their desired quantities owing to the relatively small issue size. We maintain our earlier view that market will stay range-bound with a trading range of 5250- 5500."
A leading trader said that last week could be easily termed as 'Week of deception' as investors were sitting on positive sentiment. However, the KSE 100 index registered a downturn, diminishing all hopes of capital gains in select scrips.
The week opened on a positive note where badla activity rose during first three trading days at all local bourses, where most of the investors were hoping that the market would close above the 5500 level and would continue to augment in the coming days.
However, all went in vain when the investors faced bad patch at the COT market where almost all stocks plunged hitting their badla positions. Keeping in view the current situation, financiers remained cautious in building positions over key COT stocks and that can be easily seen from the increased average badla rate.