THE market last week failed to rally up from the current lows despite the fact that one of the major demands of the brokers to remove the floor on the KSE index from Oct 27 was accepted by the Securities and Exchange Commission of Pakistan (SECP).

After remaining static at 9,184.24 for the last four sessions of the week, the KSE 100-share index managed to finish with a modest rise of 2.89 points owing to early rise. But the KSE 30-share index did not show any change and was quoted at the previous level of 10,042.85, reflecting investors’ worries on the economic situation and massive fall in the value of rupee currently being quoted at around Rs87 to a US dollar.

Single session trading volume also set an all-time low at 0.193m shares at the last session of the week as investors stayed away.

But as was expected after the extension of settlement period in the leveraged positions from 22 to 45 days, buying support either from the local financial institutions or the private banks did not re-emerge on any of the counters in a big way.

All roads perhaps led to the US dollar as a section of investors sold their holding in shares at a discount to buy the US dollar, which since then is showing steady rise from early week’s Rs80 to the weekend’s Rs87.

Price changes remained fractional all through last week as most of the alternate bouts of buying and selling remained confined to most of the undervalued shares ruling about a half of their 10-rupee face value as no one was inclined to take even the calculated risks.

As a result, new all-time low records were set in the single session turnover figures, the lowest being half a million shares as leading brokers and general investors remained conspicuous by their absence.

The plight of the benchmark KSE 100-share index was not different from the broader market as it witnessed two freezes, one official at 9,144 points since Aug 27, and the other during the last four sessions of the week at 9,184.24 points. It managed to finish week with a modest gain of 3.5 points.

A number of reasons are being given by the analysts about the lack of interest, mainly among them being liquidity crunch and the absence of market leaders who could lure investors back to the market.

“The chief inhibiting factor behind the current impasse appears to be withdrawal of support by official financial institutions including NIT, Modaraba and the banks”, said a broker adding “until they provide the much-needed lead in a massively mauled market as well as investors’ confidence, there may not be any change in the market psychology”.

“The massive outflow is finding its way into the US dollar and for good reasons too”, he said and added “over 70 per cent increase in the value of the dollar at Rs84 during the last week eloquently speaks of the developing phenomenon”, he added.

The KSE 100-share index on Monday managed to finish with a modest rise of about three points in a mixed trading session where bulk of the transactions were carried out off-the floor at a discount of 15 to 20 per cent, analysts claimed.

Trading resumed on a cautious note after the authorities refused to oblige the lobby seeking shutdown as alternative bouts of buying and selling remained confined to most of the undervalued share for obvious reasons.

The trading in stocks is certainly in turmoil for various reasons including the financial crisis in the US and European markets but the local crisis appears to be of a “Wakhry type”, and the victim of raising by some non-issues and then crying for their solution, said a leading broker who is apparently not trapped in the badla financing.

“Why the market should be closed?,” asked a leading stock analyst and said “there had been ups and downs in stock trading, which is the part of its ethics but no one cries for the shutdown”.

The Mumbai Stock Exchange, which has a massive foreign exposure, was battered by a hefty figure of 10 per cent last Friday but no player pleaded for its closure and so did the Wall Street after continued panic sell-off, he added.

“Money may not be that short as being claimed but it may not be safe as it goes where it could appreciate, said analyst Tabish H. Rajabali.

“But from where the money originated to absorb the unloading of 15 million shares or who finance the major bailout package indicates that the reported pressure on the money supply appears to be not that real”, he said adding “investors have the money but they do not have confidence in the share market”.

The exit operations by leading investors, mainly foreign ones continued for the fourth session in a row who are forced to sell to meet their payments obligations in the parent countries, stock analyst Hasnain Asghar Ali said.

He fears another crisis may be in the offing on the badla market owing to higher rates after the banks have refused to resume fresh financing and may ask some of the borrowers to adjust difference against the pledged shares, he said.

But some others said the extension by SECP in the contract period from 22 days to 44 days will allow the leveraged position holders enough time for settlement of the outstanding deals.

Forward counter: Trading on this counter remained suspended throughout last week in an effort to allow smooth settlements of large leveraged positions held by some leading brokers.

However, extension in the settlement period of contracts from the current 22 days to 45 days saved the situation including a possible default by some of them.—Muhammad Aslam