TRADING on the stock market during the previous week remained insipid as all eyes remained focused on the removal of ‘floor’ under the KSE 100-share index, which analysts hoped would lead to normal activity after three months sluggishness.

The KSE board, which met on Thursday, failed to reach a consensus on the issue. But sources said that December 1 could be the final date for the removal of ‘floor’ followed by resumption of normal trading after a long bearish spell.

The indecision on Thursday’s KSE board meeting on the issue of lifting the ‘floor’ resulted in fall of volume, which hit new single session low at only 3,700 shares breaking all previous records.

There were rumours in the market that the IMF had advised the bourse chiefs to further delay the removal until economic conditions and forex reserves showed improvement under the positive impact of the maiden tranch of $3.1 billion.

Analysts said the leading foreign investors had already unloaded their long positions in off-the-floor transactions at discount rates ranging between 20 and 30 per cent. Now the local institutional investors and retailers were in the line and they would try to hold the ground rather than sell at the decline, some brokers hoped.

“The KSE fears that removal of ‘floor’ could lead to a free for all and fresh massive price erosions, which will mostly hit small investors. This is apparently based on the assumption that the stakeholders will try to get out of the market at least for the near-term after unloading their positions and delaying the removal,” said a leading stock analyst Hasnain Asghar Ali.

He, however, said there was another view also. The current attractively lower level reached by most of the blue chips and leading stock could attract any amount of covering purchases based on capital gains.

All eyes are now focused on the removal of ‘floor’ and entry of the market support fund of Rs20 billion at its disposal, analyst Ahsan Mehanti said adding “if both join hands to put the market back on the rails, investors may witness a robust re-opening”.

The notable feature of the session was a sharp decline of Rs5.538 billion at Rs2,820.623 billion for the first time since the index was chained on Aug 27. It hitherto had been showing either-way changes in line with the activity in the ready section.

All indexes including the benchmark 100-share remained dormant again barring the KSE all-share index, which suffered a fractional fall of 0.25 points at 6,641.71.

“The ‘floor’ on the index seems to have assumed the role of a silent killer of both the daily volumes and the price movements as investors are inclined to take even a calculated financial risk owing to an uncertain future price outlook,” they said.

But resumption of trading in future contracts has raised hopes that the ready board may follow anytime during the next couple of sessions, possibly on Dec 1, they said.

“A loud whisper about lifting of ‘floor’ on Nov 17 and then on 24, passed without any official word on the status quo”, said a leading floor broker. “The expected Dec 1, could be final as the KSE high-ups may not like to test the investors’ patience any farther,” he added.

The approval of initial IMF credit line of $7.6 billion after two per cent increase in the discount rate could avert any major post-floor trading, he hoped. “The tired bulls may not miss the current attractively lower level and try to ride the bandwagon led by the bulls,” he added.

Some others are still sceptical about the future market trend on the ground that investors may not re-enter the market until prices are stabilised at a certain realistic level supported by market support fund and leading institutional investors. However, the resumption of trading on the forward counter could well prove a prelude to hedging facilities for the investors against their positions in the ready section to avert fresh fall in prices, they said.

Forward counter: Trading in November future contracts was resumed during the week but prices generally ended lower where changed, although losses were mostly fractional and reflected price adjustments here and there. However, shares came in for buying even at the falling prices.— Muhammad Aslam.