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Badla rates hit five-month low

KARACHI (February 24 2003) : The badla rates at the stock market during the preceding week reached five-month low level and were in the single digit with investment in carry over market fell by as much as Rs 500 million.

Since the unexpected 410-point correction at KSE in the last two weeks of January 2003, the local carryover market at KSE remains fairly liquid.

Weighted average badla rates at both the leading bourses of the country are at their lowest level as a majority of the leveraged positions have been squared by the investors.

According to a report of Invest Capital Securities in the outgoing week also, badla rates maintained their single digit level despite a somewhat bullish trend at the local stock markets.

The KSE-100 Index, after a long weekend, jumped by 110 points (4.6 percent) amid hopes that diplomacy may result in the postponement of the war in Iraq.

With rising liquidity and declining weak holdings, the weighted average annualised COT rate at KSE ended last week at 8.4 percent, a level not seen since September 2002.

Similarly, rates in Lahore also maintained their low levels averaging between 4-5 percent over the last week.

A liquid interbank market coupled with declining weak positions after the abnormal correction during January is forcing badla lenders to invest at the available single digit rates.

On the last day of the week, the KSE attracted investment of Rs 7.0 billion for share financing, lower than Rs 7.5 billion at the beginning of the week. At the LSE, share financing worth Rs 800-900 million was carried out during the last week.

PSO remained on the top of the share-financing list, attracting an amount of

Rs 1.3 billion at the KSE. Investors bought PSO shares amid hopes that good news from the privatisation front may jack up its share price. After PSO, Hubco attracted funds worth Rs 1.1 billion at the KSE.

Investors are betting on an interim dividend of Rs 3.0-3.5 per share, expected to be announced during the first week of March.

Some scrip specific activity is likely to be generated in the coming week as many big companies will announce their results. These include PTCL, Sui North, ICI, Pakistan Oilfields, etc.

However, in light of the uncertainty surrounding the Iraq crisis, no major movement is expected. Moreover, retail and medium size investors are still on the sidelines after they burnt their fingers in the market crash during January.

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