April 28, 2022 (MLN): The benchmark KSE-100 index has lost 540 points [10:02 PST] in intraday trade and is currently trading at 44,992.88 as the market was weighed by an increase in cut-off yields and the expectation of an interest rate hike.
The cut-off yields of T-bills have reached 22 year high, increasing by up to 129 basis points in the auction conducted by the State Bank of Pakistan (SBP) on Wednesday.
“The recent T-bills auction yields reflect market anticipation of further interest rate hikes. The average spread between 3-month, 6-month 12-month T-bills and policy rate used to be 0.61%, 1.04%, 1.29%, respectively during the last 1 year which in the today's auction has widened to 2.54%, 2.74%, 2.56%,” Sana Tawfik, Analyst at Arif Habib Limited noted.
It hints toward the emergence of recessionary pressures on the economic growth front. Moreover, with the pressure on the external account, reserves depleting, depreciation of the currency, and higher inflation, markets are bidding at higher rates, hence, leading to an increase in cut-off yields, she added.
On another note, within the money market, the six-month KIBOR reached 14.23% today, marking the highest rate in the last thirteen years.
Fertilizer, Technology & Communication, Cement, and Oil and Gas Exploration Companies have witnessed higher selling activity as they have lost around 121, 73.81, 64.28, and 46.50 points respectively.
Company-wise, the scrips of FFC, SYS, TRG, EFERT, and ENGRO have endured maximum losses.
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