Bears onslaught continued on the Lahore Stock Exchange and there was no respite in the selling pressure, hitting the broader market, resulting in widespread declines. The LSE-25 Index lost 120.63 points closing at 3,929.28 compared with previous at 4,049.91 points.
Daily average turnover was, however, flat at 8.763 million shares as against 8.621 million shares of the previous closing session. There was no change in the sentiment on first day of the week and pressure gripped the market, which, after having undergone a loss of over 100 points, finished the session below 4,000 level, brokers said.
They said, so far, the market has not completely digested the impact of increase in discount rate, thus pressure is continuing. Uncertain political situation in the country is another significant factor for the pressure, they added. Today, pressure was seen across the board, but the worst hit sectors were oil, banks, fertilisers and refineries, which retreated sharply. Pressure is likely to prevail in the coming session too, however, any positive news could relieve the market, brokers said.
Banks' failure to provide badla financing to brokers at increased interest rate last Friday was the key reason for the persisting pressure since badla failed to take place on that day, Mirza Muhammad Irfan of the Capital Vision Securities Limited said. Even on Monday (today) banks could not provide CFS facility to brokers at the increased discount rate, due to which, they could not go for badla. He said because of high interest rate, banks were not ready to provide funds for badla, he added.
"In line with the State Bank's restrictions, financial institutions cannot provide funds beyond certain limits. As per SBP restrictions, they cannot invest in the market more than 50 percent of their equity," he said.
He said the market was still in trauma of SBP's 'unpopular' decision to enhance discount rate and needed support from the government side. The government should direct the financial institutions to start buying at present levels to encourage investors and also relax restrictions on banks for badla financing, he further said. Such measures could provide an immediate breather to the market and restore investors' confidence, he observed.
Out of a total of 101 active issues, 8 moved forward, 58 retreated while 35 were intact to their previous levels. In positive column, First Capital Equities improved by Rs 3.00, Bank Al-Habib Rs 1.71, Saudi Pak Commercial Bank Re 1.00, Genertech Pakistan 0.59 and PIAC Rs 0.25. In negative column, PSO lost Rs 23.27,l MCB Bank Rs 16.06, Adamjee Insurance Rs 14.39, Engro Chemical Rs 14.34 and Attock Refinery Rs 11.90.