Speedy decline was still witnessed, for the eighth session in a row, on Monday whereby assurance from financial institutions to fund the settlement of futures contracts failed to change the bearish trend. The KSE-100 index fell 255.66 points, or 3.2 percent, to 7708.29. Out of the 256.66 points decline, OGDC and PTCL contributed 129 and 57 respectively. The volume rose to 172 million shares.
Over the weekend the offices of the KSE were open to facilitate the financing problems faced by brokers. Another surprise, witnessed on Monday, was the rise in trading volumes which happened for the first time since the decline started a week ago, said an analyst. Trading volumes, which stood at 171 million shares, went up by 58 percent compared to 108 million shares of Friday.
It was also noticed that smaller Scripps, which had relatively lower downside, like KESC, TRG and PIA, were most active with buying interest shown by investors. Fauji Fertiliser was the major leader, which reached its upper limit and left the field with a gain of Rs 1.10 closing at Rs 128.35. "We think that until the large cap Scripps are stabilised the downward slide of the index would continue," same analyst said.
Tanvir Abid, head of research from Live Securities, said that despite the news of removing the cap from badla financing the market did not show a positive trend and remained volatile. The Scripps like Picic, FFC and TRG remained in the positive column throughout the trading session. "We expect this trend to continue in the market in the short-term and advise the investors to remain out of the market till it stabilises."
Hasnain Asghar from Aziz Fidahusein said that the 18-hour marathon badla session held during week-end, accompanied with relaxation given by SBP regarding removal of limits on COT financing, invited funds for settlement of March Forward, which was translated into T+3, although quantities remained outstanding in the market.
Punters-led buying in PTCL and in leading cement, banking, fertiliser sectors did invite turnover and allowed the index to enter the positive territory (despite the fact that OGDC stayed glued to the lower circuit breaker) but failed to attract follow-up buyers as the sidelined waited for grand settlement on Wednesday. Absence of buyers during the session, therefore, never allowed the index to avoid further adjustment and the index ended with a net loss of 256 points.
The pressure is likely to continue while further adjustment allowing the main stocks to enter the yield zone of at least 10 percent and a PE of at most 11 would invite institutional funds. Healthy turnover and consolidation should therefore be awaited for taking fresh positions.
The badla decreased by 1.25 billion rupees. Badla sessions were held on Saturday and Sunday to help the investors to convert the futures positions to the badla market where the badla increased from 21.71 billion rupees to 33.4 billion rupees. There was major badla reduction in PTCL, NBP and OGDC as weak holders converted their positions. The badla rates increased to 24 percent as the KSE management had increased the COT premium to 24 percent.
PTCL lost Rs 3 to Rs 58.40 on a volume of 30 million shares; Pak PTA Ltd declined by 15 paisa to Rs 11.40 on turnover of 25 million shares; Fauji Fertiliser closed at Rs 27.20, ie Rs 1.40 down, on trading of 24 million shares; TRG moved up to Rs 12.10 to Rs 10.60 on deals of 7.8 million shares; and Hubco lost 45 paisa to Rs 27.60 on transactions of 7.7 million shares.