Bourse witnesses another dull session with low volumes

Local market experiences another dull session as investors remain on the sidelines.

KARACHI: The local market experienced another dull session on Wednesday as investors remained on the sidelines on fears of a rise in treasury bill yields and a hike in the key policy rate in the upcoming monetary policy.

The Karachi Stock Exchange’s (KSE) benchmark 100-share index ended 0.46 per cent or 46.08 points lower at 9,946.42.

The cut-off yield on the benchmark six-month treasury bills – which was announced later in the day – rose to 12.84 per cent in an auction. In the previous auction on September 8, the yield was 12.77 per cent.

“The increase in cut-off yields could further raise expectations that the central bank may hike the policy rate,” analysts said.

The State Bank of Pakistan is scheduled to announce the monetary policy on September 29 for the subsequent two months. The central bank raised its key policy rate by 50 basis points to 13 per cent in July and analysts expect another similar hike this time around as well.

Consequently, investors booked profit in companies whose cost of doing business will increase with the interest rate hike, said Samar Iqbal, equity dealer at Topline Securities.

Moreover, growing discontent among the business community over mismanagement of economic policy and deteriorating law and order situation is keeping investors at bay, analysts said.

Volumes continued to remain low with 51 million shares traded on Wednesday compared with Tuesday’s 88.5 million shares.

Shares of 368 companies were traded on Wednesday. At the end of the day, 102 stocks closed higher, 242 declined and 24 remained unchanged. The value of shares traded during the day was Rs1.49 billion.

Despite all the economic and political noises, foreign institutional investors continued to be net buyers as benchmark KSE-100 offers an attractive yield of 6 per cent which is much higher than regional markets, analysts said.

Nishat Mills Limited (NML), the largest textile mill, was the volume leader with 4.14 million shares closing down 0.7 per cent to Rs46.77 for the second straight day as international cotton prices persistently surged, analysts said.

It was followed by Jahangir Siddiqui and Company with 3.13 million shares falling Rs0.26 to close at Rs9.85 and Silkbank Limited with 2.81 million shares losing Rs0.06 to close at Rs2.65.

Published in The Express Tribune, September 23^rd, 2010.