KSE-100 stages recovery, but still ends 0.62% lower

Pakistan stocks recovered in intra-day trading after coming under the hammer early on in the session, closing 0.62% lower on Thursday, as participants came to terms with increasing T-bill yields.

The KSE-100 opened negative, and dropped to an intra-day low of 44,657 – a fall of 885 points – a day after the cut-off yield on government of Pakistan's Market Treasury Bills (MTBs) further increased up to 129 basis points (bps) in the auction. In the previous auction held on April 20, the margin on short-term government securities surged in the range of 55 bps to 70 bps.

However, a recovery meant that at close, the KSE-100 ended with a loss of 283.89 points, down 0.62%, to finish at 45,249.41.

Pressure was created early on as participants offloaded their holdings due to expected interest rate hike in the upcoming Monetary Policy Committee (MPC) meeting after 6-month KIBOR also reached a 13-year high.

Talking to Business Recorder, Sana Tawfik, vice-president research and a senior analyst at Arif Habib Limited (AHL), said the bearish sentiment was due to the latest T-bill auction results that were higher than expected.

KSE-100 extends losing streak, falls another 0.62%

“The market sentiment expects a policy rate hike in the upcoming State Bank of Pakistan (SBP) MPC meeting,” said Tawfik.

She added that the mechanism of rolling back of subsidies by the government as it seeks to revive the International Monetary Fund (IMF) Extended Fund Facility (EFF) program would determine the policy rate.

“We are expecting a 100 basis points hike,” she said, adding that this would discourage imports, while also moderating demand, which would also help in reducing the current account deficit.

The federal government raised over Rs 672 billion through the auction for short-term government papers.

However, as the day progressed, the market came to terms with the yields, with cherry-picking dominating the session.

Sectors driving the benchmark KSE-100 index downward included technology and communication (56.90 points), fertiliser (49.51 points), and power generation and distribution (46.47 points).

Volume on the all-share index rose to 325.47 million from 223.8 million on Wednesday. The value of shares traded jumped to Rs9.29 billion from Rs5.58 billion in the previous session.

WorldCall Telecom was the volume leader with 37.5 million shares, followed by Cnergyico PK with 34.66 million shares, and Hum Network XD with 27.43 million shares.

Shares of 340 companies were traded on Thursday, of which 93 registered an increase, 233 recorded a fall, and 14 remained unchanged.