THE stock market last week was saved from fresh big shakeout as negative fallout of two per cent hike in the discount rate to 15 per cent from 13 per cent by the central bank owing largely to the price freeze, analysts said.

The KSE 100-share index managed to post a fractional rise of 0.95 points at 9,184.09 from the previous 9,183.14 after several lean weeks, but the market capital suffered a modest fall of Rs1.903bn at Rs2,827.733bn from the last week’s 2,829.636bn.

Already terribly squeezed by a massive ($10bn) money laundering scam, investors should have indulged in fresh panic selling driving prices lower by another 20 per cent but the status quo saved the post-interest hike situation, they added.

However, sailing on the stock market may not be that smooth after the removal of the floor as the cost of borrowing is expected to be much higher; they said and feared that another money crunch may follow having negative impact on future stock trading.

The auction at Rs55bn of the membership card of a defaulted member to clear his outstanding dues echoed in the market awaiting sale proceeds of the second one. It was a bad news for the market as it happened after about three decades.

But a fractional rise of 0.95 points in the KSE 100-share index after several weeks of status quo indicated that that it had at last broken the intriguing status quo aided partly by rumours of removal of the floor possibly by next week, analyst Hasnain Asghar hopes.

This gave credence to a loud whispering that the Rs20bn market support fund may be operative preceding the removal of floor possibly any time next week, he said.

“The next week could be crucial for the future direction of the market as some important events including approval of the IMF bailout package are on the cards”, analyst Ahsan Mehanti said.

The default of two prominent brokers and rumours that some others may follow them and the sale of their membership cards to clear their outstanding dues of the affected persons was, therefore, passed unnoticed as investors were worried over some other important issues.

Trading on Monday, however, resumed on an insipid note as in the absence of an official word on early removal of lock under the KSE 100-share index and a massive money market scam did not allow normal activity on any of the counters.

Analysts said the share market would have received a big jolt in the backdrop of arrests of leading money changers on charges of alleged illegal dollar transfers to foreign countries but for the price freeze under the lock on the KSE 100-share index.

The big question is, however, being debated among the stock brokers, some of them having stake in the US dollar, is whether or not the current drive against money laundering would end the ‘dollarisation’ era in the country, they said.

A formidable section of leading investors, who had built-up long positions in US dollar followed by its sharp rise from Rs66 to 84 after having sold some blue chips are bit worried after the arrest and sealing of selling outlets of some of leading currency dealers, analysts said.

“However, the arrest of some top money changers on alleged transfer of huge amounts in dollars to various countries did not have an immediate negative impact on the stock trading, it would take its toll in the coming sessions”, they said adding “many stock players have a stake in the US currency and are worried over the future developments on the issue after the probe”.

But some others predicted that the arrest of the top money changers might cause huge losses to some of the big investors as the ruling rate of the dollar may fall to its pre-reaction level after the formal reopening of the currency markets.

On the foreign aid front, most of the reports were positive indicating that the IMF had considerably eased tough conditions on its bailout package of $5bn and an agreement may be signed possibly by next week, market sources said.

But the top five participants of the market support fund are said to be a bit reluctant to Rs5bn each to the proposed Rs20bn funds owing to prevailing conditions on the stock market and feeble chances of an immediate recovery amid fears of fresh losses, they added.

Forward counter: Trading on this counter was dull as investors awaited fresh developments on the leveraged issue after the expiry of 45 days relief period. No share came in for dealings during the week.—Muhammad Aslam.