Bears onslaught kept the Lahore Stock Exchange (LSE) in negative zone last week, where share prices underwent heavy losses with the index moving down by 13.86 percent. The market received battering for four days, out of five trading days of the week, while the LSE-25 index moved down from 3774.36 points to 3251.08, registering a decline of 523.28 points or 13.86 points.
On the other hand, overall volume depicted an increase of 8.187 million shares or 19.28 percent, reaching 50.637 million shares compared with previous 42.452 million shares.
Stock-brokers said the surge in volume means the market was under selling pressure, adding the volume was not up to the required level, depicting lack of interest on the part of investors. All key chips touched its downward circuit breakers during the week under review, which caused a panic-like situation in the market.
They pointed out that there was no other reason for this dismal situation, except the uncertainty caused by cold war between brokers and authorities of Securities and Exchange Commission of Pakistan (SECP) over futures rules. Row between the brokers and SECP brought a negative impact in the market and it did not even respond to positive reports of PTCL privatisation, they added.
The last week commenced with a negative note, as the market received massive losses on Monday amid news of tug-of-war between the SECP and brokers of Karachi.
On that day, the LSE-25 index went down by 190 points or 5.05 percent amid an alarming decline in turnover which plunged to 15.623 million shares from 42.452 million. On the second day, the market, however, showed bullish signs on the back of fresh buying in index-based shares such as PTCL, PSO, PPL and OGDC followed by the support of some banks, which lifted the index up by 41 points, and it closed 3,600 points level.
During rest of the three days, equities witnessed downward movement, receiving across the board falls.
On Wednesday, the index shed 84.69 points to close at 3539.77 points, while on Thursday it shed another 171.64 points or 4.84 percent.
Equities maintained the declining trend on Friday and eroded further following heavy pressure in PSO and PPL, which received a major blow, pushing the benchmark index down by 117.05 points to finish at 3251.08 points.
Brokers described Islamabad bomb blast as the chief factor for the erosions on Friday. But as a matter of fact, the market took a weak start and was down before the news of the tragic incident reached the market.
There are reports that the government is determined to hold bidding of PTCL on June 10, but ongoing protest of PTCL workers against the privatisation of company has raised concern of investors and they are scared of delay in the bidding date, a stock analyst said.
Negative news about the imposition of new taxes/raising of capital value tax on shares transactions is also another disturbing factor for the brokers and investors which is preventing investors to enter the market. Not only the general public has gone out of the market, but interest of institutional buyers is also minimal in the market, which has led to dull activity.
Majority of local brokers were of the view that if the higher authorities did not pay heed to the existing state of affairs in the market, it could plunge into deep crisis.
The market is unlikely to recover till the federal budget, as there is no fresh reason for change in the sentiment, while there is also no change in the scenario arising out of the brokers and the SECP dispute over futures trading rules, said Mirza Muhammad Ejaz Baig, director, Capital Vision Securities Ltd.
Similarly, there also appear little chances for early implementation of the margin financing plan, he said, adding the State Bank of Pakistan (SBP) and the Karachi Stock Exchange (KSE) have planned to organise a workshop for training of brokers, investors, and bankers for margin financing and the Lahore brokers will also attend it. However, no date has been announced for the workshop.
Baig said the Lahore Stock Exchange (LSE) has capped the limit of badla at 36 percent while there is no activity in futures market.
According to him, no one is ready to go for futures deal at 100 percent margin. "In view of above reasons, I do not foresee any change in the market trend during the week, starting from Monday, however, support may come at the lower levels, but it will be a temporal phenomenon", he added.
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