KARACHI, Oct 12: The weighted average ‘badla’ rates at the Karachi carryover trade (COT) market closed at 15.7 per cent on Friday, which analysts said was “a (high) level not seen since early June this year”.

Badla report prepared by brokerage InvestCap stated that the impact of Friday selling at local bourses due to political uncertainty was also observed in the badla market. Tight liquidity in the local inter-bank market also contributed to a higher badla rate. Analysts said that the Friday COT session at KSE opened amid confusion as rates were on the higher side. But later on funds, were invested by leading players that brought rates down to relatively comfortable levels.

InvestCap stated that at the KSE badla market both badla volumes and investment declined on Friday. COT volume (released and unreleased) decreased by 22 million shares on Friday, settling at 142 million shares. Similarly, badla investment stood at around Rs4.1 billion, compared with Rs4.9 billion before elections on Wednesday. Analysts believed that some of the weak holders left the market in fear of further fall in equity values. “In case of any desperate selling in equities, leveraged investors are the first one to get panicky,” wrote Mohammad Sohail, Research head at InvestCap in his badla report.

Meanwhile, IP Securities said in their badla report that the incoherence between the average investment and average volume was attributed to the fact that due to unclear prevalent situation in the market, COT financing was provided at higher rates. Moreover, buying interest from institutions assisted in trivial decline in badla volumes and investment.

Despite the fact that the KSE-100 index touched historic high levels, the lack lustre seen in the price movement in PSO and PTCL during the week was also reflected in the average COT investment of the two stocks that declined by 16.5% and 20.1% respectively, IP Securities stated.

Analysts observed that in HUBCO the punters continued with the speculative interest as was shown by an upsurge of 12.1% in its COT investment and 9.6% in COT volume during the week. Fauji Fertilizer remained under the focus of speculators and recorded a whopping increase of 31.3% in its COT investment.

Analysts stated that with liquidity crunch expected to ease off in the coming week (due to inflow of Rs17 billion through maturity of T-bills sold earlier by SBP) coupled with the fact that the unclear situation prevalent in the market was likely to fizzle out, it was possible that genuine investment would be boosted. These analysts expected COT volumes and rates to remain at the lower end of the spectrum during the coming week.