May 7, 2006	Sunday	Rabi-us-Sani 8, 1427

KARACHI, May 6: The weighted average CFS rate on the Karachi Stock Exchange last week fell by 240 basis points at 15 per cent from the previous 17.4 per cent on selling prompted by reports that cap on investment may be removed.

Analysts at a leading research house attributed the decline to market talk that banks may be allowed to directly provide funding to the share market adding this will eventually lead to removal of investment cap of Rs24.5 billion.

“The CFS rates will fall further after additional funds are made available by the banks, a major switchover from the existing lenders market to a free market,” they said.

Investment under CFS was maintained around the ceiling rate of Rs24.06 billion as borrowers were not inclined to go beyond them for technical reasons. Both the CFS rate and investment on the Lahore Stock Exchange were quoted at 19.2 per cent and Rs2.3 billion, billed as upper limit.

The open interest on the forward counter maintained a steady rise and was last quoted at Rs15.5 billion, showing an increase of Rs2.3 billion over the previous week’s figure, analysts said adding but on the other hand stock future spreads fell to 9.7 from the previous 17.5 per cent owing to highly erratic share values, off 780 basis point.