KSE-100 INDEX FACES SLUGGISH TRADING ACTIVITY, AVERAGE VOLUME PLUNGES BY 21PC
KSE-100 Index currently passing through volatile conditions dipped by yet another 200 points to close in red at 49,191 levels on the last trading session of the week.
The market volume which was also extremely low at 182 million indicating sluggish trend persisting in the market as the Index remained under pressure as political noise, higher VaR (Value at Risk) requirement by regulator and lower international oil price kept the Index in check.
Index closed the week at 49,191 points, down by 0.9% WoW. The foreign institutional portfolio investors (FIPI) registered net inflow of US$15 million. While the average volume traded decreased by 21% WoW while average value traded decreased by 20% WoW last week.
There was a drastic cut in the Index in the first trading session when the Index plunged over 300 points, however, it managed to recovery later in the second half with a drop of 200 points at the close.
According to market analysts in fact the sluggish activity at the stocks market was due to various factors including political uncertainty as well as brokers concern over what they called notices issued by the regulatory authority.
Last week, the National Clearing Company of Pakistan Limited (NCCPL) has increased 10% VaR Margins and Haircuts for Ready and Deliverable Futures Market (DFM) and has revised list of Margin Eligible Securities (MES) acceptable as collateral in DFM.
According to NCCPL, this initiative was taken in order to ensure timely communication and seamless implementation of above stated measures, the Company had already issued various notices and circulars for creating awareness among market participants in February, 2017. It may being noted that the National Clearing Company of Pakistan Limited (NCCPL) is acting as a Central Counterparty and accordingly managing the risk management framework to ensure efficient and transparent provisions of clearing and settlement services to its Clearing Members.
As part of its continued endeavor to develop and implement stringent yet practical risk management measures, the NCCPL, under the guidance of the apex regulator, Securities & Exchange Commission of Pakistan, has taken these steps to improve and strengthen the prevailing risk management framework that shall become effective from March 9, 2017.
Meanwhile the international oil prices, which always have an impact on bourses, were hammered on fear of short supply result a dramatic decline in prices to a six-week low, touching US$50.00/bbl after weekly US crude oil inventories rose to 8.2 million barrels, making a total of 528.4 million barrels. Although analysts expected a build of 2 million barrel. However, Kuwait is set to host a meeting on March 26th, which will be attended by both OPEC and non-OPEC members to review compliance with the crude production cuts.