In compliance with the directives of the Securities and Exchange Commission of Pakistan for removal of floor from December 15, the equities on the very first day started suffering massive decline on the Lahore Stock Exchange amid selling pressure. Most of the investors preferred offloading their holdings to get out of the market at available rates that resulted in a loss of over 24 percent during the last week.
The LSE-25 index that had been moving around 2825.36 since August 27, showed rapid decline on every trading day and registered total loss of 679.90 points to end at 2145.46. However the transaction volume that was reduced in four digits also showed vertical improvement and recorded a handsome turnover of 14.741 million shares during the week under review.
The market, on the first trading day after the removal of floor that remained in place about 110 days, opened on a depressed note and shed 206.63 points to close at 2618.73 while the shares trading went up to 761,500. Most of the shares opened at their lower locks while the market stayed in red zone throughout the day and not a single company could manage its closure in green zone against the five, which closed in minus column.
The experts were already expecting about five percent declines on each day. The offloading was not only seen in blue chips but the second and third tier shares also kept on moving down on the first day. However, on a writ petition filled by a brokerage firm, the Lahore High Court ordered to restore the LSE Board's powers, which were earlier withheld by the SECP.
Again on Tuesday, the market commenced trading at negative note and remained in red zone throughout the day. However, the decline in index reduced to 143.71 points with the increasing turnover of 1.228 million shares.
While continuing overnight sentiments, the market opened on a negative note and remained under pressure throughout the day's trading. All the major shares because of the five-percent circuit breaker, opened at their lower caps but the market showed 10 percent loss just in two days. The experts were of the view that the market situation would become visible after the court's judgement on the CFS case in the Sindh High Court.
There was no change in the market behaviour on Wednesday and equities continued suffering losses amid selling pressure. As a result, the index declined by 137.66 points but the trading volume increased more than double to 2.998 million shares. Equities suffered losses across the board in the absence of institutional and potential investors. For the first time, three companies stayed in plus column and afterward the gainers' number kept on rising which was considered a good sign at least for the small shares. According to experts, the market may start recovering its position after losing 40 percent.
They held the CFS issue responsible for the market current situation and said early resolution of the issue would help market recovery soon. Moreover, they said the investors' confidence has been totally shattered which was the main reason of the present scenario while the legitimate expectations regarding the constitution of fund also aggravated the situation. They stressed the need for restoration of investors' confidence saying the government should take measures in this regard to bring the stocks business out of the crisis.
Though, the index slide down on Thursday by 123.49 points, yet the gainers were more than the losers for the first time after a long period since August 27, as 13 companies closed in green zone and 11 scrips went down. It was significant that number of gainers exceeded the losers because of fresh buying in small shares. This also generated optimism in the market for the near future.
The day's earlier sentiments also prevailed on Friday-the last trading day as the gainers' strength kept on increasing and finally 18 companies stayed in positive column against 9 companies which closed in red zone.
Moreover, the transaction volume also significantly improved to 6.820 million shares while the index loss was also restricted to below 100 as it closed at 2115.46 with a decline of 98.41 points. The index decline of over 206 points on the first day reduced to only 98.41 points which reflected a positive change in the market sentiments. Blue chips companies including OGDC, Sui Northern, Askari Bank, Arif Habib Bank registered losses while small shares including the cement companies showed strength.
According to the market experts, the blue chips maintained downward slide and would continue to suffer till the resolution of CFS issue. According to them, the blue chips are suffering because of CFS involvement in their buying. They further feared that if the CFS issue met further delay, it would result in default of many brokers who have to pay dues to the exchanges.