Share prices suffered heavy blow on the Lahore Stock Exchange (LSE) last week with the LSE-25 index going down by 8.99 percent and transaction turnover 40.69 percent, ending the winning streak for the last few weeks.
Analysts and brokers came up with conflicting views over the week's heavy pruning. Some said a correction was due in the heavily overbought market where shares of certain companies were highly inflated and this rise was not merit-based. While others said there was nothing wrong with the fundamentals as for the last few weeks, the market had moved on the basis of merit and shares were not over-priced.
According them, limited CFS financing and slow pace of progress with regard to finding a permanent solution to the badla financing caused disappointment among the market players, as CFS facility expires in February next year, forced them for profit-taking.
They said both the management and the regulator have closed their eyes towards the possible disaster that could emerge after expiry of the CFS facility after few months which has been introduced for a certain period.
"The start of the week was positive and we were expecting rallies ahead of Eid, but the market behaved quite unexpectedly in subsequent sessions", a broker said, while commenting on the market movement during the week under review.
The market was highly volatile that triggered panic that led everybody to go for selling, he added. The LSE-25 index during the week, underwent a net loss of 394.46 points or 8.99 percent to finish the week at 3,992.06 as compared to its previous weekend closing at 4386.52 points. The volume descended to 44.193 million shares from 74.515 million, registering a fall of 30.32 million shares or 40.69 percent.
Equities moved in a zig-zag way on alternative buying and selling bouts on first day of the week under review with all the key shares remaining subdued while the index reaching 4,400 level. At the close, it reached 4,400.37 points as compared to 4,386.52 of the previous session, depicting a marginal increase of 13.85 points. The turnover declined to 66.909 million shares from 74.515 million, showing an increase of 7.606 million shares.
At the outset of trading, the market was bullish and in initial hours the stocks moved up sharply following buying interest in banks, cements, and gas shares, but then it turned volatile. The trend was highly unpredictable that disturbed investors.
Equities on the second day registered losses across the board under the lead of blue chips on account of the profit-taking. The LSE-25 index closed down at 4,235.91 against 4,400.37 of Monday, denoting a decline of 164.46 points. The volume, however, improved to 79.749 million shares as compared to 66.909 million shares traded a day earlier.
The shares, which had substantially gained and touched the premature levels, such as PSO, PPL, OGDC in the petroleum sector, while National Bank, MCB Bank, Bank of Punjab, Askari Commercial Bank from the banking sector, witnessed steep fall that pushed the market into negative zone at end of the session.
Share values, however, sharply rebounded on the very next day, gaining 2.70 percent, following institutional buying, but the volume remained on the lower side. The market recovered on the back of heavy buying interest from the institutional side, thumping previous day's losing streak. All the players were seen in buying mood who had offloaded their positions in panic a day earlier, which helped the LSE-25 index up by 114.60 points, which ended at 4,350.51 as against 4,235.91 of the previous session. The volume, however, declined reaching 67.311 million shares compared with 79.749 million of the previous session, depicting a fall of 12.437 million shares.
Massive profit-selling forced bulls to surrender to bears, which took the share market to nose-dive on second last day of the trading week. The LSE-25 index shed 190.80 points or 4.38 percent, closing at 4,159.71 versus 4350.51 points. The volume ascended to 81.183 million shares from 67.311 million of the previous session, registering a net decline of 13.872 million shares or 20.60 percent.
The market resumed trading with a positive sign and continued with its overnight trend with the index gaining over 100 points in early trading hours. But soon heavy selling pressure emerged, particularly in petroleum shares, which did not allow bulls to stay to their positions.
According to some brokers, there were rumours that the government might once again extend the date for handing over PTCL control to Etisalat, which affected the sentiment. Bearish spell also continued on Friday, and the market finished the week with another loss of 4.03 percent, sending shock waves among investors. The LSE-25 index shed 167.65 points to end below 4,000 level at 3,992.06 as against 4,159.71 points of Thursday. The volume declined to 44.193 million shares from 81.183 million of the previous session, registering a decline of 36.990 million shares.
The market painted a baffling picture as all blue chips were locked at their lower levels because of downward caps volume was also drastically down with the oil sector and banking shares receiving heavy falls.
The market witnessed a roller-coaster drive in the entire week with the KSE-100 index receiving a loss of 571 points on the weekend, said Ahmed Nabeel, head of operations, Invest and Finance Securities Ltd.
He said the market touched its peak on October 18 at 9,011 and then nose-dived in just two days, shedding 600 points, addling the reason for such a gigantic pruning was overbought position of futures market, which touched Rs 16 billion mark during the week under review.
Moreover, he pointed out that at the time of earthquake, the positions were in the hands of stalwarts who pushed the market upward and all this exercise was artificial. Later on, they opted for profit-taking and offloaded heavily, giving positions in hands of weak-holders who failed to keep pace with the bull-run, that resulted in net loss of 600 points in just two sessions.
Another approach is that the market followed the Bombay market trend which, after touching 9,000 points level, fell victim to bears and its index reached 8,000 level, Nabeel stated.
"In my opinion, the 8,225 level of KSE is very crucial and the market must recover from this point", said Nabeel, adding: "If no recovery takes place breaking of 8,225 level may result in another bearish spell of 200 points, bringing the KSE index down to 8,025." At this stage, one should remain careful and it is better to buy cements and PTCL on dips, Nabeel suggested.