Rumours about interest rate hike keeps stock exchange under pressure

Uncertainty triggered by the reports about a possible hike interest rate kept the Pakistan Stock Exchange in red zone on Wednesday but Finance Minister Ishaq Dar’s remarks about the circular debt induced buying in state-owned entities, lifting the KSE-100 Index considerably after earlier losses.

Although the market started the session on a positive note with the benchmark KSE-100 Index gaining 230 points by 9:45am, the market slumped later as the fear of imminent 1.5 to 2 percent raise in interest rate resulted in panic.

The policy rate currently stands at 16 percent and any further increase will certainly discourage investment in the country.

Meanwhile, the reports about the hike came despite the fact that the next meeting of SBP Monetary Policy Committee is scheduled for Jan 23 as there were suggestions that the session could be held before that date.

However, Dar told a press conference in Islamabad that the government was serious in tackling the circular debt issue and would pay the amount by the dividends of the state-own enterprises – a statement triggered buying of shares of these companies.

That’s the reason why Pakistan Petroleum, Sui Northern, Oil and Gas Development Company, and Sui Southern saw their share prices going up amid frantic buying – propelling them into the volume leaders.

By the time trading was closed, the KSE-100 Index was recorded at 40,758.20 against the previous closing value of 40,801.51. During the session, the index reached a high of 40,988.28 and touched the low of 40,597.35.

As far as the market capitalisation is concerned, the value stood at Rs6.49 trillion (Rs6,491,446,491,052 to be exact) against the previous level of Rs6,491,379,028,855 with the shares worth Rs6.98 billion traded on Wednesday.

On Wednesday, the total volume of the benchmark KSE-100 Index stood at 109.80 million shares, around 5 percent decrease from 115.52 million shares traded during the previous session.

As far the volume leaders are concerned, K-Electric topped the list with 20.46 million shares followed by Pakistan Petroleum 17.77 million, Oil and Gas Development Company 12.92 million, Sui Northern 8.68 million and Unity Foods 5.71 million.

Shares of 86 companies included in the benchmark index were traded Wednesday out of which recorded 60 a fall, 23 registered an increase and three remained unchanged.

The shares of five worst performing companies during the day were: First Habib Modaraba 5.13 percent, International Steels 4.48 percent, Abbott Laboratories 4.45 percent, Century Papers and Board Mills 3.90 percent and National Refinery 3.79 percent.

On the other hand, Pakistan Petroleum gained the most with a 4.97 percent increase in its share price followed by Sui Northern 4.12 percent, Oil and Gas Development Company 3.72 percent, Millat Tractors 2.59 percent and Pakistan Telecommunication 2.44 percent.

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