Market watch: Drop in T-bill yields pushes up stock market

Benchmark KSE-100 index rises 127.99 points to settle at 45,083.04

KARACHI:

Bulls held their grip on the Pakistan Stock Exchange on Thursday, pushing the KSE-100 index above the 45,000-point mark, as investors cheered the drop in yields on government papers in the latest auction.

On Wednesday, the rate of return on T-bills and Pakistan Investment Bonds (PIBs) declined owing to the status quo in monetary policy announced by the State Bank of Pakistan earlier in the week.

The lower yields pointed towards further relief in the monetary policy, which bolstered investor sentiment. However, a surge in global oil prices that rose past $90 per barrel and increase in Covid-19 cases capped gains.

Expectations of a further increase in import bill, on the back of the jump in crude prices, worried the investors, which triggered a selling spree.

The KSE-100 index rose as soon as trading began, however, pessimism over the surging oil prices, which may hit $100 per barrel, sparked a sell-off and erased some of the gains by midday.

Near the end of the session, an attempt was made by market participants to propel the index higher, however, it was followed by a bearish spell, which dragged the index down. Nevertheless, the market managed to close with slight gains.

At close, the benchmark KSE-100 index recorded an increase of 127.99 points, or 0.28%, to settle at 45,083.04.

A report of Arif Habib Limited stated that range-bound session was witnessed at the bourse due to concerns over mounting international oil prices and rising Covid-19 cases.

Oil touched $90 a barrel for the first time in seven years, supported by tight supply and growing political tensions between Russia and Ukraine that added to concerns about further disruption in an already tight market.

Earlier, the market opened on a positive note but soon after profit-taking emerged across the board. Main board activity remained gloomy, the report said.

On the flip side, activity continued to remain sideways as the market witnessed hefty volumes in third-tier stocks.

“In the last trading hour, value buying was observed due to the announcement of corporate results,” the report said.

JS Global analyst Neelam Naz said that the benchmark index touched an intra-day high of 45,180 before closing at 45,083, up 128 points day-on-day.

Total traded volume stood at 174 million shares with TRG Pakistan (+5.7%), Hum Network (+3.3%), Unity Foods (+3.9%), WorldCall Telecom (+1.9%) and Cnergyico PK (-1.1%) being the highest contributors.

The KSE-100 index gained ground mainly because of TRG Pakistan, Hubco, Pakistan Services, Mari Petroleum and Allied Bank Limited.

“Going forward, we recommend investors to book profit in the range of 45,300 to 45,500 and wait for the political dust to settle before taking any fresh buying positions,” the analyst said.

Overall trading volumes rose to 173.6 million shares compared with Wednesday’s tally of 137.3 million. The value of shares traded during the day was Rs6.6 billion.

Shares of 333 companies were traded. At the end of the day, 135 stocks closed higher, 169 declined and 29 remained unchanged.

TRG Pakistan was the volume leader with 19.1 million shares, gaining Rs4.64 to close at Rs85.93. It was followed by Hum Network with 15.2 million shares, gaining Rs0.22 to close at Rs6.96 and Unity Foods with 11.7 million shares, gaining Rs1.08 to close at Rs28.59.

Foreign institutional investors were net sellers of Rs54.2 million worth of shares during the trading session, according to data compiled by the National Clearing Company of Pakistan.