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Markets

KSE-100 falls 0.8% over rumours of interest rate hike

  • Increase in T-bill yields on Wednesday signals possible upward revision in policy rate by SBP
Published February 23, 2023

The Pakistan Stock Exchange (PSX) turned negative on Thursday and the KSE-100 Index fell 0.8% owing to spike in the yields of treasury bills (T-bills) that signaled an increase in policy rate by the State Bank of Pakistan (SBP).

The market largely expects the SBP to hold a meeting out of schedule to notify a revision in the interest rate. This rumour in particular triggered selling at the equity market and restrained investors from buying fresh stocks.

KSE-100 rises 0.53% as investors remain hopeful for revival of IMF deal

By the end of the trading session, the benchmark index was down 329.09 points or 0.8% to close at 40,838.51.

The day kicked off with a fall and the KSE-100 Index traded in a narrow range for the remaining part of the session.

Index-heavy cement, automobile, banks, fertiliser and oil sectors ended the day with modest losses.

A report from Arif Habib Limited stated that bears took charge at the PSX after consecutive bullish sessions.

“The benchmark KSE-100 opened in the red zone due to speculation of a policy rate hike in the coming days after Wednesday’s T-bills cutoff yields were at the higher side leading the index to plunge down and make an intraday low of -395.08 points.”

Prevailing political uncertainty kept the investors at bay, however across the board volumes remained healthy, the report said.

In its report, Capital Stake wrote that bears took control of the PSX on Thursday.

“Indices slipped lower and lower all day long, while volumes fell from last close,” it said. “Sharp increase in yields on Wednesday’s treasury bill auction led to concerns of a similar upward move in the benchmark policy rate.”

On the economic front, rupee closed at Rs260.93 against the US dollar after an appreciation of 0.37% or Re0.97 in the inter-bank market on Thursday.

Sectors dragging the benchmark KSE-100 Index lower included banking (80.83 points), oil and gas exploration (79.06 points) and technology and communication (48.41 points).

Volume on the all-share index fell to 150.3 million from 196 million on Wednesday. The value of shares dropped to Rs5.7 billion from Rs6.4 billion recorded in the previous session.

WorldCall Telecom was the volume leader with 14.2 million shares followed by Maple Leaf Cement with 10.5 million shares and Kot Addu Power Company with 9.7 million shares.

Shares of 319 companies were traded on Wednesday, of which 75 registered an increase, 220 recorded a fall and 24 remained unchanged.

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