Stocks fall as bond yields rise

Stocks on Thursday buckled under fears that a steepening bond yield curve could spark a safe-haven rush, denting the less-attractive-looking capital market, amid monetary tightening and rupee instability concerns, traders said.

The Pakistan Stock Exchange's (PSX) benchmark KSE-100 Shares Index closed lower by 283.89 points or 0.62 percent to 45,249.41 points after trading in a range of 45,533.30 and 44,648.48 points.

Ahsan Mehanti at Arif Habib Corp said stocks closed lower as record surge in government bond yields to 14.99 percent spurred concerns over their negative impact on the capital market.

He said strong financial results in oil and banking sectors lent some midsession support, while reports of a $7.4 billion Saudi aid package sought by the government also underpinned the sentiment, but not to much avail.

However, rupee instability and uncertainty over the terms of the IMF bailout programme sealed the bearish close for the stocks, he added.

Analyst Neelam Naz at JS Research said across-the-board selling remained the order of the day that saw some teensy recovery before the closing bell.

Naz also linked the bearish mode to record treasury bond yields in the secondary market, harbingering another policy rate hike in the coming monitoring policy committee meeting.

“Going forward, we recommend investors to avail any downside as a buying opportunity with special focus on value stocks,” she said.

KSE-30 Shares Index also fell 112.60 points or 0.65 percent to 17,314.51 points.

Volumes increased 102 million shares to 325.46 million from 223.82 million shares, while value rose to Rs9.290 billion from Rs5.583 billion.

Turnover in the future contracts mounted to 308.09 million shares from 229.104 million shares.

Market capital contracted to Rs7.519 trillion from Rs7.575 trillion. Out of 340 active stocks in the session, 93 fell, 233 rose, and 14 made no move.

Topline Securities in a note said the market remained under pressure as investors reacted to an increase in T-bills yields.

The highest increase was recorded in shares of Nestle Pakistan, which climbed Rs74.99 to Rs5,875 per share, followed by Sapphire Fiber, which grew Rs65.90 to Rs1,059.50 per share.

Pakistan Tobacco XD, down Rs51.99 to Rs998.01 per share, was the worst loser of the day. It was followed by Rafhan Maize XD that dipped Rs50 to Rs11,600 per share.

Arif Habib Ltd said rising bond yields battered the market and the index was in the red zone throughout the day owing to profit selling.

The secession remained volatile as selling was observed across the board. On the contrary hefty volumes were observed in 3rd tier stocks, the brokerage said.

Sectors that weighed on the trade included technology (-56.9 percent), fertiliser (-49.5 points), power (-46.5 points), and energy (-43.7 points).

WorldCall Telecom was the turnover leader with 37.49 million shares. The stock closed lower by 2 paisas to Rs1.68 per share. It was followed by Cnergico PK that recorded a trade of 34.66 million shares.

The oil sector stock lost 44 paisas to close at Rs6.35 per share.

Other major volume-makers included Hum Network XD, Pak Elektron, Pak Refinery, Lotte Chemical, Telecard Limited, Ghani Global Holdings, Unity Foods Ltd, and K-Electric Ltd.