Midday Report: KSE-100 down by 552pts as T-bills yields jump

June 02, 2022 (MLN): Following a jump in cutoff yields in the T-bill auction, the Pakistan Stock Exchange (PSX) remained under pressure. The benchmark KSE-100 index has lost 552 points so far and is currently trading at 42,203 [12:53 PST].

In the auction conducted by the State Bank of Pakistan (SBP) on Wednesday, the yields were increased by up to 75 basis points.

The cut-off yields for 3-month, 6-month, and 12-month T-bills saw a jump of 75, 55, and 75 basis points to stand at 15.25%, 15.25%, and 15.50%, respectively.

Market analysts believe that May’s higher inflation reading of 13.8% YoY has fueled expectations for a further rate hike in the policy rate in the coming months.

"The recent T-bill auction and secondary yields point toward another round of rate hike of up to 100bp. This adjustment in monetary settings is highly likely, considering the increased inflationary expectations as Pakistan tries to make its way back into the IMF Program and reduce the heightened currency risk as well as a country risk by overcoming FCY obligations," Wajid Rizvi, Head of Economy and Strategy at JS Global said.

Cement and Commercial Banks, Fertilizer and Technology & Communication have witnessed higher selling activity as they have lost 79, 77, 71 and 57 points, respectively.

Company-wise, the scrips of LUCK, OGDC, SYS, ENGRO and HBL have endured the maximum losses.

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