December 09, 2018 (MLN): In harmony with the universally declining trend observed in world markets, and in response to the State Bank of Pakistan’s decision to push up monetary policy by an aggressive 150 bps, the stock market in Pakistan remained volatile this past week, as the benchmark KSE – 100 index made a net loss of over 1,800 points, slipping below the two touchstones of 40,000 points and 39,000 points. The index currently stands closed at 38,562 points.

On the other hand, Pakistani Rupee at the interbank market, depreciated by over Rs.2 over the week, currently standing at Rs.139 per USD.

However, official data release by SBP revealed that Pak Rupee’s Real Effective Exchange Rate index (REER) decreased by 2.68 percent in October, falling to a value of 108.1450 from 111.1276 in September.

In response to this, Research Analyst Zeeshan Afzal at Insight Securities believes that another 4% devaluation in addition to the recent depreciation in the last few days, is required to bring the currency to its fair value.

Additionally, some other data releases this week, apprised that:

•             Yearly Inflation rate in November 2018 was 6.50 percent compared to 6.78 percent in October 2018 and 3.97 percent in November 2017.

•             Arrival of cotton at various ginneries in Pakistan, fell short of last year’s quantity by 765 thousand bales, marking a year-on-year decrease of 7.55%. As of December 1, 2018, the total arrival was recorded at 9.4 million bales

•             In November the cement industry dispatched 3.899 million tons of cement that was one percent less than 3.941 million tons of cement dispatched during the corresponding month of last year.

•             Net sale of securities during the week ended November 30, 2018 has been recorded at Rs.2.5 billion.

•             Weekly Sensitive Price Index (SPI) for combined group, during the week ended December 6, 2018, has slipped by 0.55% over the prior week, whereas compared to the corresponding week of last year, SPI has jumped up by 5.8%.

Apart from this, on commerce ministry's proposal relating to export of sugar, the Economic Coordination Committee (ECC) of the Cabinet Tuesday waived off the condition related to start of sugarcane crushing and directed to start crushing as soon as possible.

Moreover, ECC allowed allocation of up to 30 MMCFD gas from Zafir field, to Sui Southern Gas Company Limited, 66 MMCFD Mari Deep Gas to MPCL, and the augmentation of export quota by 0.1 million tons, bringing the total export quota to 1.1 million tons.

Gold and Oil:

Gold and Oil started off the week by gaining value after both USA and China decided to put their trade hostilities on hold for at least 90 days. While Gold prices edged upwards throughout the week, the value of Oil on the other hand remained volatile owing to the decision by OPEC regarding a plausible supply cut along with growing US inventories and a plunge in global stock markets amidst concerns over economic slowdown. At one point, Palladium outshined gold in becoming the most valuable metal with its prices soaring by around 50 percent in less than four months to record levels. By the end of the week, Gold prices were on track for their best week since August, as the dollar weakened on a looming pause in the U.S. Federal Reserve's tightening cycle.

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