KSE-100 plummets 744 points as market sees further increase in interest rate

Despite the International Monetary Fund (IMF) announcement of a staff-level agreement on the sixth review, a higher-than-anticipated interest rate and speculations regarding a further hike dented investor sentiment as the benchmark KSE-100 Index lost 744 points or 1.6% with volumes also declining on Monday.

Stocks opened flat but gained shortly after, cheering the IMF announcement. However, as euphoria on the IMF development subsided, fundamentals kicked in as the KSE-100 ended in the red.

A higher cost of borrowing, and a dent on bottomline played on the minds of investors who opted to book whatever gains/losses they could.

At close on Monday, the KSE-100 Index ended with a sharp fall of 744.41 points or 1.6% to settle at 45,745.

“The market is expecting a further interest rate hike in the coming days, after secondary market yields jumped, pushing expectations,” Saad Hashemy, Executive Director at BMA Capital, told Business Recorder.

KSE-100 gains 0.82%, settles near 46,500 level

As per Ismail Iqbal Securities, secondary market yields have increased by around 100-120bps as compared to yields being offered on Friday.

“3M Tbill trading at 9.8% as compared to Friday's 3M PKRV of 8.6%, and 3Y bond trading at 11.4% as compared to Friday's 3Y PKRV of 10.5%,” stated Ismail Iqbal Securities.

On the other hand, the market is still fighting the ‘TRG Pakistan hangover’, said Hashemy. The share price of the company has fallen to Rs95.51, amid allegations made in the US against Zia Chishti, CEO of TRG Pakistan.

On the economic front, the SBP raised the key interest rate by 150bps, a measure taken to curb accelerating inflation, controlling the widening current account deficit, and supporting the rupee against the US dollar.

Sectors dragging the benchmark index lower included cement (185.18 points), technology and communication (154.00 points) and oil and gas exploration (90.35 points).

Meanwhile, volumes on the all-share index decreased, clocking in at 261.90 million, down from 304.21 million recorded on Friday. The value of shares traded also declined marginally, amounting to Rs10.94 billion, down from Rs12 billion on Friday.

TRG Pakistan Limited was the volume leader with 22.37 million shares, followed by Byco Petroleum with 21.60 million shares, and TPL Properties XB at 15.81 million shares.

Shares of 344 companies were traded on Monday, of which 70 registered an increase, 263 recorded a fall, and 11 remained unchanged.