Badla market saw sharp appreciation in volumes and investment after the Securities and Exchange Commission of Pakistan (SECP) gave extension in badla phasing out system during last week. The weighted average badla rate was recorded at 11.6 percent on Friday, a decline of 14 basis points from last weekend. Badla investment in terms of shares and value both increased gradually during the week. Badla investment, recorded at 220 million shares and Rs 22 billion, was up by 13.6 percent and 15.5 percent, respectively, from previous Thursday's values.
This increase could be attributed to the rise in badla volumes, gradually, over the week as equity prices were almost at the same level as that of the previous week.
Badla volume in OGDC and NBP increased to 10 million and 7 million, respectively, from last weekend, thus reflecting shift from futures market to badla market.
At LSE, weighted average badla rates was 19.1 percent on the last day of the week, compared to 11.4 percent on previous Thursday. Badla investment at LSE increased by minor 2.7 percent to Rs 1.5 billion on Friday.
During the week the 6-month T-Bill rate was hiked up by 1.5 percent and regular OMOs were held. However, this did not have a great impact on the KSE badla rate which declined slightly along with the decline in the KSE-100 index on the weekend.
Badla volumes at the KSE increased from 194 million shares on the previous weekend (April 21) to 220 million shares on last Friday (April 29), showing an increase of 13 percent on weekend-to-weekend basis. Increase in volumes was due to the end of uncertainty that prevailed in the market on the decision of the extension of COT.
The corporate results season has almost ended, failing to trigger any major upside in the market. "We believe that the equity market will remain range-bound for some time. Also, from June 8, 2005, onwards COT exposure in the remaining scrips will be reduced at a rate of 8.25 percent in terms of number of shares, weekly, till August 26, 2005.