KARACHI (June 24 2006): The Karachi Stock Exchange (KSE) has prohibited short selling till further orders to sustain rally at local bourses. The governing board of directors, in its emergent meeting held on Friday, decided short selling in Futures Contract shall continue to remain prohibited until further orders.

It is also notified that all measures taken vide above notification were of interim nature and are subject to review by the board in due course of time.

The index registered a sudden slide during the second session after rumours that ban on short selling imposed for June contract would be removed for July deliveries.

This threat forced players to sell shareholdings in all pivotal, recording sharp declines. All active scrips, including OGDC, National Bank of Pakistan, MCB Bank Limited, Pakistan Petroleum Limited, etc, closed at lower circuit.

According to an analyst, the ban for indefinite period is a good sign for the market and the index would propel when open on Monday.

However, a source said the meeting was uncalled for and only three stock member directors passed this ruling in the presence of the managing-director. Two stockbroker directors, directors appointed by the Securities Exchange Commission of Pakistan and chairman were either out of the country, city or busy with their own schedules.

During the June 14 meeting, the KSE chairman banned short selling in June contracts to arrest declining trend on the bourse. It was decided to review the situation in the presence of full board.

The KSE-100 Index plunged 363.47 points, or 3.6 percent, to 9,807.53 points. The index rose 2 percent for the first time in seven weeks.

The KSE-100 Index since June 15 had surged 16 percent as of yesterday's close. After reaching a record 12,273.82 on April 17, the index plunged as much as 29 percent through June 14.

"Rumours that short selling will be allowed next month and regulator would take punitive action against brokers involved in recent share market crash wiped all the gains, said Salman Naqvi, head of equity sales at Aba Ali Habib Securities Co, Karachi.

Copyright Business Recorder, 2006