KARACHI, June 26: Stocks on Thursday failed to sustain the early run-up as the mid-session witnessed an avalanche of selling offers followed by distress signals from the Lahore Stock Exchange over the higher carryover rates but active covering purchases in leading base shares saved the situation.

However, the future direction of the market is now linked to amicable settlement of heavy badla business, notably at the LSE, and saving of the KSE from the negative fall-out of any bad news from there.

After having breached through the psychological barrier of 3,400 points earlier in the session, the KSE 100-share index finally ended with a modest gain of 10.13 at 3,396.61 as leading investors played on both sides of the fence followed by reports of higher badla rates. Market capitalization also rose to Rs755.877bn.

“The mid-session heavy selling was caused by reports that badla rates at the Lahore Stock Exchange have touched an all-time peak level of 60 per cent and its fallout jolted the KSE,” market sources said.

It was a session of massive either-way movement as the index showed a change of 45 points, touching its career-best level of 3,423 and the lowest at 3,380, signalling that the market’s highly overbought position could attract a lot of unloading both from the financial institutions and the bargain-hunters.

A massive volume of over 500m shares reflects that both the bulls and the bears are locked in a terribly bitter battle of wits and during the next couple of sessions it may be further intensified, having a negative impact on the market’s current run-up, analysts said.

“It is a technical correction in an overbought market and was long overdue,” analysts said. “The badla rate around 17 per cent and carryover business of Rs14bn could mean anything to a market seeking to establish new highs.”

The early run-up was attributed to fresh heavy buying in the cement shares followed by reports of further increase in production quota from 72 to 79 per cent and the subsequent selling to the market’s overbought position.

Leading shares on some other counters, notably on auto, insurance and textile sectors have also attained new peak levels during the current run-up and rose further on active follow-up support.

Most leading floor brokers predict that the market has already touched its peak level for the near-term, boosted by the President’s US visit and the aid package of $3bn, its journey beyond this index level may need another morale-booster.

Minus signs dominated the list as price dents caused by the mid-session selling could not be fully recouped. New Jubilee Insurance, Ahmad Hassan Textiles, Sapphire fibre, National Refinery, Bolan Casting, Clover Pakistan, Noon Sugar, Gatron Industries, Shell Pakistan, Colgate Pakistan and Pakistan Refinery were leading among them, off Rs2 to 6.95.

Most of leading shares did not look back and posted fresh gains ranging from Rs5 to Rs7 for Engro Chemical on reports of higher sales, Tri-Pack Films, Nestle MilkPak, Cherat Papers, Fazal Textiles. But the largest gain was recorded in Javed Omer Vorha and IGI Insurance, up Rs15.15 and Rs10.20 respectively.

Umer Fabrics, Mari Gas, General Tyre, Exide Battery, EFU Insurance General, Dewan Khalid Textiles and Pakistan Reinsurance Co, up Rs2 to Rs4.50.

Trading volume soared to 543m shares from the previous 483m shares but losers forced a strong lead over the gainers at 213 to 158, with 54 shares holding on to the last levels.

Hub-Power topped the list of most actives, higher by 15 paisa at Rs37.35 on 72m shares followed by PTCL, unchanged at Rs28.50 on 66m shares, DG Khan Cement, sharply higher by Rs2.10 at Rs30.25 on 50m shares, Maple Leaf Cement, up 80 Rs17.45 on 35m shares and Lucky Cement, higher by Rs55 paisa at Rs20 on 33m shares.

Other actives were led by Dewan Salman, off 45 paisa on 31m shares, Engro Chemical, sharply higher by Rs5.25 on 30m shares, Nishat Mills, up 90 paisa on 29m shares, PSO, higher by Rs1.95 on 22m shares and ICI Pakistan, up 55 paisa on 13m shares.

FORWARD COUNTER: Engro Chemical also came in for active support in sympathy with its counterpart in the ready section and rose Rs4.75 at Rs90.25 on on 1.153m shares. Its July settlement also rose by Rs4.70.