The badla investment last week reached its peak at Rs 12 billion with rates registering an increase of 70 basis points as punters hoped positive outcome from the meeting with the officials in Islamabad.
Badla investment at the KSE once again peaked at Rs 12 billion on Friday, August 19. Previous Friday (August 12) badla investment was slightly lower at Rs 11.7 billion. Badla investment rose on the back of both higher rates and a slightly higher volume.
Badla volumes increased slightly from 117.3 million shares on previous Friday (August 12) to 117.7 million on August 19, showing a mere 0.3 percent increase.
The weighted average badla rate at KSE increased from 15.1 percent on previous Friday (August 12) to 15.8 percent on last Friday (August 19). The anticipation of good news fuelled buying on Friday, which increased the demand for badla, which was already near its cap on Wednesday (August 17).
The weighted average badla rate at LSE, in contrast, showed a decline and came down from 10.1 percent from 10.4 percent on previous Friday (August 12).
Badla investment at LSE picked up from Rs 0.78 billion on August 12 to Rs 0.84 billion on August 19 increasing by 7.3 percent on weekend to weekend basis.
Faisal Jiwani, research analyst at Investcapital Securities, said that total leverage saw yet another decline during last week as investment in the futures counter was slightly lower. This week (August 22-26) will be the switch-over week for futures as August and September futures wold trade simultaneously as August futures will end on Friday, August 26.
The stock futures spread at KSE came back to normal levels and stood at 8.84 percent on Friday (August 19) compared to 2.12 percent on previous Friday (August 12). The rise in spreads indicated returned interest of investors. Spreads were also high because in the previous week''s situation some futures'' average daily rates were below the ready average rate, returning a negative spread.
Open interest in stock futures declined to Rs 8.1 billion from Rs 8.5 billion on previous weekend. Open interest in terms of volume also declined slightly from 81 million shares to 79 million shares.
As mentioned before, this week will be the last week for August Futures and transition will be seen from it to the September counter.
This major increase in spreads is due to squaring of short position by speculators amid sudden recovery at the end of the week. Otherwise, spreads were on the lower side, in the single digit range, for most part of the week. Going forward, with upcoming rollover week, it is likely that spreads would come down due to squaring/rollover by leverage buyers in August future contract.
The banking and oil & gas sectors led the gains. It was no coincidence that these sectors also have the best fundamentals at present. Volumes soared to higher side with 194 million shares traded, PTC leading the way with a trade volume of 51.5 million shares. There were hopes among participants that officials would come up with something positive for the stock market in a meeting between KSE board members, SECP and the Prime minister, which was scheduled over the weekend.
POL and PSO remained among the major gainers as the scrips closed higher at Rs 315.25 and Rs 370.70, respectively.

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