Share prices were mostly on downward side on Lahore Stock Exchange (LSE) during the last week ended 22nd of July, primarily on account of fate of badla and status of margin financing and other factors, including raise in rate of returns on National Saving Schemes (NSS).
The market opened the week with a bearish note and because of persisting uncertainty over the issue of badla financing, it mostly remained in negative zone, while the volume also squeezed because of wait-and-see policy of investors.
According to stock analysts, there was hardly any support from institutions and other potential investors due to which trade turnover remained on the lower side during the week under review.
The squeezing volume is a real concern for the market people and it will further come down if the row between Securities and Exchange Commission of Pakistan (SECP) goes on. "Now all eyes are on the decision of the 17-member committee, constituted by the government, to seek a solution of the issue, which is acceptable to all stake holders," a broker said. Overall the market depicted weakness for four of total five days during the week under review with the LSE-index losing 117.03 points or 3.1 percent, retreating to 3653.67 points from 3770.70 points.
Equities underwent heavy losses on Monday following no breakthrough in the meeting held between the government high-ups and brokers in Karachi on 16th July, to resolve the problems concerning CoT issue. On that day the LSE-25 index went down by 71.55 points to close at 3699.15 points compared with 3770.70 points of the previous session.
Volume declined drastically to 20.514 million shares from 30.190 million, posting a fall of 9.676 million shares. PSO, PPL led losers' column, while Union Bank and Pakistan Oilfields were the days' key gainers. The bearish trend continued to prevail on Tuesday under the lead of key petroleum shares and PTCL. The LSE-25 index on that day lost another 64.86 points closing at 3634.29 compared with 3699.15 points, while turnover improved to 35.099 million shares from 20.514 million shares.
Fueled by fresh buying interest in oil sector and banks, share values staged a smart recovery on Wednesday, where the index posted a rise of 1.5 percent. The LSE-25 index scored gain of 57.04 points reaching 3691.33 points as against 3634.29 points. Overall volume, however, lowered to 29.130 million shares from 35.099 million shares of the previous session, registering a net decline of 5.969 million shares. The market showed good performance despite increase in interest rate of National Savings Schemes (NSS).
Share values, however, failed to maintain the overnight buoyancy on Thursday, as most of the key players adopted a cautious approach, awaiting the outcome of ongoing meetings between government high-ups and brokers, to settle badla and margin financing issues. The LSE-25 closed at 3683.36 points as against 3691.33 of the previous session, registering a marginal fall of 7.97 points. Volume, however, improved visibly to 44.434 million shares from 29.130 million shares, depicting a rise of 15.304 million shares.
The market showed a zigzag activity throughout the session due to lacking support from key players, who stayed at distance adopting a wait-and-see policy. The share market behaved roughly and ended the last trading day of the week with a weak note with the index benchmark posting a net fall of 0.8 percent amid descending volume of transactions.
The LSE-25 index closed at 3653.67 points compared with its past closing of 3683.36 points, registering a decline of 29.69 points. Volume descended to 32.120 million shares from 44.434 million of Thursday, registering a fall of 12.313 million shares. The market could not settle down and mostly remained directionless due to lack of support from key players. Some interest was seen in oil sector and banks but it had only marginal impact on the overall sentiment. PSO and Bank Alfalah were the top gainers of the day, while Adamjee Insurance was the key victim of selling pressure.
According to stock analysts, the market witnessed a confused trading during the whole week under review, while volume reduced, with no interest from punters and traders. People were hopeful about the meetings of the Prime Minister's advisor on Finance and Minister of State for Finance with brokers but they disappointed them. Later, the SECP move to advise the management of the KSE to put positions of key brokers made by them in futures trade on the KSE website, also sent shocked waves in the market.
Every one is awaiting the final decision of the 17-member committee constituted by Dr Salman Shah comprising bankers, brokers, stock exchanges people and SECP representatives, to settle the CoT issue, said Mirza Muhammad Irfan, equity research head of the Capital Vision Securities Ltd. If the decision comes in favour of the market, it will improve; otherwise sentiment will further depress. For the last three months, the market has been depending on intra-day trading without any support from local institutions or foreign funds,
he added. He said that stockbrokers reportedly have proposed that till the margin-financing regime fully comes into force, badla should be allowed with certain modifications. If the SECP agrees to this suggestion, it will overcome the liquidity problem, the market is facing these days, he added.