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Market Wrap – Elixir Securities Limited

Karachi: Pakistan stocks edged up trading thin volumes to close above 11,800 levels as investors cherish for coming Eid Holidays.

According to Elixir Securities, Engro Corp ENGRO PA +5% kept proceedings interesting on a rather dull day with stock trading over 11% of KSE100 volumes. Stock recovered to close on its upper lock after gas was restored to new plant (ENVEN) for production. ENGRO and FFC had recently emerged as an ideal hedge as gas curtailment hampered ENGROs leveraged book and allowed Fauji Fertilizer FFC PA ‐.2% to free ride on any pricing moves which ENGRO took to keep its book afloat. But anomalies in Financial Markets don’t last forever, ENGRO reversed its recent price hike of PKR 400/bag as govt promised to restore gas in 3 days. Investors switched positions by selling FFC and buying ENGRO as they anticipate that government will not derail from its commitment of uninterrupted gas due to election year. Overall, activity in the blue chips remained dull on lack of activity by major participants.

Owing to EID Holidays from Monday (7th to 9th Nov), Elixir Securities expects dull activity tomorrow as jobbers and retail participation will remain on the lower end. Elixir does target November to post higher returns as Oil and Banking stocks are trading on cheaper multiples to their respective future earnings.

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