The share market witnessed heavy erosion during last week, ending on November 4, 2006, which was also the rollover week, and KSE-100 Index lost 320 points, or 2.8 percent, while the leveraging remained at its upper cap throughout the week.
Bears remained on rampage almost the entire week on the back of heavy offloading by investors who took cautious stance on reports of banning in-house badla, which, however, was deferred for a month.
Ahsan Mehanti of Shahzad Chamdia Securities said that it was a rollover week and there is usually heavy pressure historically in these days, which was the major reason triggering offloading.
He said that it was also last week for in-house financing, which forced the investors to take cautious stance. However, later favourable decision by the regulating authority helped the market to post decent recovery on Friday, the last trading day of the week.
After an extended weekend on account of Eid-ul-Fitr, the market saw negative closing on weekly basis. However, handsome recovery of 301 points on Friday minimised the fall as the index had lost 621 points, 5.4 percent, during the first four sessions of the week.
By virtue of its heavy dominance in the Index, Oil and Gas Development Company Limited was responsible for the overall decline in the index. According to calculation, out of 320 points fall in index, the score of 250 points was due to OGDCL. This was because of the fact that OGDCL occupies highest share of 22 percent in the index.
Khurram Ghufran at KASB Securities Limited said KSE-100 index moved down 2.7 percent despite a gain of 301 points on the last day of the week.
The week opened after a prolonged Eid break on Monday with mixed sentiment as corporate result in exploration and production, banks and particularly cements failed to impress.
On Tuesday, the market remained under pressure, as a technical correction had also become long overdue after the bull-run before the holidays.
On Wednesday, the market went into free-fall as the deadline for the phase-out of in-house badla and the date, November 6, for the implementation of the new risk management system approached.
However, expectations of positive developments from the meeting between the board of Karachi Stock Exchange (KSE) and the Securities and Exchange Commission (SECP) later in the day on Thursday prevented the market from falling any further.
Average daily volumes depicted an improvement rising by 39 percent w-o-w to 256 million shares as against a turnover of 184 million shares recorded on the last trading day.
The market is expected to depict an upward trend this week, as despite of mediocre financial result announcements, prices of major blue chip companies are trading below their fair value.
Ahsan Mehanti said that the market, in the upcoming days, was expected to go up as the CFS limit has been increased to Rs 55 billion. He said that the rise in liquidity in the market was directly proportional to the extension in the CFS limit.
He said that according to SECP chief, the CFS limit may be extended further, above Rs 55 billion. This would give a boost to the sentiment of the investors.