Interest renewed on hopes for leverage products

KARACHI: Stock market gained 71.3 points due to renewed interest from local investors who were hoping that margin buying would be reintroduced.

“The ongoing meeting regarding leverage products enticed Investors enough to remain active throughout the day,”

The KSE gained 0.73 per cent to end at 9,860.99. Turnover was 77.94 million shares, up from 50.55 million shares traded on Wednesday.

A committee constituted to finalize recommendations for a new leverage product for stocks adjourned their discussions to Friday afternoon. Broker representatives said that many issues had been resolved, but that more time was needed to finalize all modalities concerning margin trading. There were hints that differences may have emerged between some of the committee members.

KSE authorities and the Securities and Exchange Commission of Pakistan (SECP) met last month to discuss margin buying and other leveraged products, and decided to form a committee required to submit its recommendations within 15 working days.

“Pakistan stock’s upward rally now in its second day is and volumes saw significant improvement Investors are largely betting on margin product that will likely bring much needed liquidity to the market,” said Elixir Securities analyst, Faisal Bilwani. He added that some profit selling ahead of the weekend and close to 10,000 countered by interest on earnings expectations was likely to keep market volatile.

There were rumours of a possible tax incentive to financiers, currently taxed at 35 per cent, that will encourage increased capital market funding, according to dealers. Analysts said Elixir securities believed that this was the key reason for the recent breakout.

“Ongoing meeting regarding Leverage product enticed Investors enough to remain active throughout the day. Continued institutional support enhanced volumes to remain around 78 million shares. Session end saw modest profit taking from retailers as share prices eroded,” said Topline Securities’ equity dealer, Samar Iqbal.

Of the 401 active stocks today, 215 advanced, 164 declined and 22 remained unchanged. The value of the stocks traded in the market today was Rs2.97 billion.

“LOTPTA was the volume leader with 10.5mn shares traded and closed at Rs8.49. After news of the Bugti Family having asked OGDC to raise the rent of various fields in Balochistan flowed in, the scrip closed slightly negative at Rs142.25,” said JS Global Capital’s analyst, Muzzamil Mussani.

OGDC interestingly traded very volatile with aggressive profit taking at day’s highs. HBL continued to gain on possible acquisition of Citibank’s part of consumer portfolio.

Lotte Pakistan PTA was the volume leader with 10.4 million shares traded. Its stock price went up by Rs0.11 to end at Rs8.49. JS & Co was the second volume leader with 6.67 million shares traded. Its stock price went up by Rs0.14 to end at Rs13.04. Byco Petroleum was the third volume leader with 3.79 million shares traded. Its stock price went up by Rs1 to end at Rs11.45.

Published in The Express Tribune, July 9^th, 2010.