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| July 11, 2005 | Monday | Jumadi-us-Sani 3, 1426 |
KSE rife with rumours of extension in ‘badla’ phase-out date
THE stocks maintained their winning streak for third consecutive week as bulls were not inclined to leave the floor expecting an extension in date to phase-out the Carry Over Trade (COT).
Although, the price pattern remained mixed throughout the week, the index managed to post a good gain for third continuous week as leading shares managed to finish with an extended gain, adding another Rs39 billion to the market capital at Rs2,110 billion.
Rumours about a parallel COT along with the bank margin financing, however, dominated the trading but there was no official word on the issue till the fag-end of the week.
Reports that the KSE bosses have decided to take up the issue with the SECP over parallel badla market have raised hopes that its demand may be accepted to ease the reported pressure on money supply which in turn had restricted the broker-activity as was evident from low volumes.
The KSE 100-share index maintained its upward drive after breaching through the 7,600 points barrier at 7,635. It finished around 7,588.94 as compared to the previous 7,464.60, up by 124.34 points for three weeks in a row, reflecting the strength of leading base shares.
Pakistan’s bourses had been complaining about the liquidity problems ahead of the phasing out of badla financing on August 26. These have requested the Securities and Exchange Commission Pakistan (SECP) to allow the extension till the time bank margin financing comes of age.
Since the start of the week, rumours that the SECP had agreed to continue the parallel market (margin and badla financing) till December 31 were afloat in the market.
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“I fear small investor may again be trapped like in the market crash in March last”, a leading analyst said adding, “the SECP should confirm or deny rumours to save small investors from possible losses if the market takes a snap dive”.
However, if the SECP extends the phasing out date and accepts the idea of parallel COT market, there could be boom-like conditions on the strength of most of the basic fundamentals, he added.
Stocks, therefore, staged a snap recovery on active short-covering in leading oil shares triggered by strong rumours that the KSE had received official nod on the extension of COT until December 31.
Turnover figure, however, failed to expand proportionately as rumours based on some Islamabad information got currency a bit late when investors were engaged in moping operations and closing bell was just around.
The market was expected to extend the snap rally next week also if the rumour was confirmed by the KSE officials as investors were awaiting some positive news on the badla-related issues.
The OGDC, the Pakistan Petroleum, the PSO and the PTCL which together hold a weightage of 50 per cent in the index led the market advance on strong covering purchases, finishing with strong recoveries.
Although there was no official word on the issue but the rumoured extension in the COT financing could give the needed push to the ailing market even by tomorrow, brokers said.
According to rumours, badla and bank margin financing will go together until the end of the current year before the total phasing out of badla.
“The falling prices, low traded volume and the lack of investor-interest in share business were said to have worried official quarters in Islamabad and they have finally accepted the KSE proposals to extend the cut-off date of badla from August 26 to December 31”, analysts said.
The general perception was that the change of a system takes time till the people involved in it were fully geared after judging merits and demerits of both the systems, they said.
The abrupt decisions and the deadlines had already done a great damage to stock trading and it was necessary to go by the market parlance with a view to restore respectability to trading, some others said.
Plus signs, therefore, forced a comfortable edge over the losing ones, leading gainers being the Berger Paints, Pakistan Petroleum, Mari Gas, Shell Pakistan, National Refinery, Pakistan Refinery, Attock Petroleum, followed by the N.P. Spinning, Gatron industries, Kohat Cement, Fauji Fertiliser, Unilever Pakistan, the OGDC, the PSO, Attock Refinery and many others.
Losers were led by the Artistic Denim, Siemens Pakistan, Atlas Honda, and Nestle MilkPak, followed by Gatron Industries, Packages, Dawood Hercules, United Sugar, Al-Abbas Sugar, Haroon Oils, Murree Brewery, Pakistan Engineering, Metropolitan Bank and Wyeth Pakistan followed them.
FORWARD COUNTER: Barring the PTCL, which remained under pressure owing to the optic-fibre cable fault, fell sharply lower. All other speculative issues managed to finish with sharp gains under the lead of Pakistan Petroleum, the OGDC, Pakistan Oilfields and the PSO amid active trading and short-covering.
—Muhammad Aslam
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