The row between the Securities and Exchange Commission of Pakistan (SECP) and the brokers over COT trade kept the share market hostage, while the LSE index ended the last week with a net loss of 231.79 points or 6 percent. During the week under review, the market remained in grip of conflicting news regarding COT issue, while most of the investors stayed on sideline amid confusion, resulting in drastic reduction in trade turnover.
There was also little support from potential investors due to which the market moved in negative zone during first two sessions of the week.
On the third day, initially, the market remained under pressure, but in late hours buying interest emerged on news of Prime Minister's intervention and his directive to the Minister of State for Finance Omer Ayub Khan to resolve the issue of COT in consultation with the SECP and the brokers.
The market responded the news positively and on that day, it finished with a net gain of 72 points, while there was also a sizeable improvement in volume.
On Thursday, the market maintained the rising posture and took a very good start receiving across the board buying interest following hopes of positive outcome of the SECP-KSE meeting over the COT issue. However, in second half of the session, a massive scale profit-taking surfaced despite news that the SECP had extended the badla freezing condition till August 24, 2005. But the market ignored the news and people took to profit-taking, as a result of which the index shed most of the early session gains to finally close with a reduced gain of 38.16 points.
According to stock analysts, due to short week, investors did not take risk to hold positions and offloaded heavily. The market remained closed on Friday on account of Eid Milad-un-Nabi (SAW).
Overall the LSE-25 index was down by 231.79 points or 6.04 percent to close at 3603.83 points as compared to its last week's closing of 3835.62 points, while the volume declined to 65.725 million shares from 70.713 million.
Stock experts said that most of the general investors stayed on sidelines amid confusion over COT. The investors offloaded in key chips, which led to widespread equity falls, particularly during the first couple of sessions, with blue chips hitting their lower circuit-breakers.
According to analysts, the margin financing and COT should be allowed to run side by side, and this practice should remain intact until banks are fully prepared for the margin financing. So far, their response has been very poor and even they are not ready to accept margin financing as a bank product, they added.
Moreover, they suggested that the SECP must convince banks for the margin financing, while at the same time attention should be given to educate the bankers, brokers and investors to deal with this alternative scheme, which has to replace the old badla system.
According to Mirza Muhammad Irfan, equity research, Capital Vision Securities, the extension in the COT freezing is a positive development, thus the market is expected to behave differently when it re-opens on Monday provided nothing untoward happens.
He said the existing price levels are attractive and could attract fresh buying. Institutions are expected to encash this situation, he pointed out. People are very hopeful about the quarterly corporate results, which will start pouring in last week of the current month, he added.