OUR STAFF REPOTER LAHORE - The week started off on a positive note owing to news of hike in urea prices by ENGRO, despite concerns over domestic political scenario and global economic outlook. However the price hike was later reversed after intervention by the government. Overall, due to the long weekend ahead activity remained dull as average daily volumes declined by 2.5%WoW to 73mn shares, while the market closed at 11,957 level, up 3.4%WoW. On the macro front, CPI for October clocked in at 10.96%YoY vs. consensus expectations of 10.5%, however T-bill rates witnessed a decline of 7-9bps in the auction held during the week. Furthermore, S&P also affirmed Pakistans long term rating at 'B- and short term rating at 'C, with a 'Stable outlook. Gas load management plan was approved during the week and it was decided that two out of four fertilizer plants on SNGPL network will not be supplied gas in November. To recall, ENGRO is still facing gas suspension at its new urea plant due to which the company raised its urea prices on Monday. However, government intervention led to a reversal in the price hike. S&P has affirmed Pakistans long term rating at 'B- and short term rating at 'C. The rating agency also maintained a 'Stable outlook on Pakistan on the back of strong external account position. Moreover, the PKR also strengthened during the week and touched its three month high of Rs86.16 vs. US$. PSO announced higher than expected 1QFY12 result of Rs14.50/share (up 207%YoY), while ENGRO posted 9M2011 earnings of Rs14.21/share (up 27%YoY). The two stocks gained 12%WoW and 21%WoW respectively. Active institutional buying in FFC and ODGC helped index to gain 2.46%. Experts said that the squaring off of October contract also helped lift the confidence of investors who aggressively bought share of fertilizer and oil sector. FFCs earnings and dividend announcement next week coupled with inflation number will set the direction of the stock market next week. Post 1QFY12 result announcement and analyst briefing by Pakistan State Oil (PSO); we retain our earnings forecast for the company. PSO reported earnings of Rs14.50/share in 1QFY12 (up 207%YoY) compared to our estimate of Rs12.33/share. The growth in earnings was attributed to recognition of 1% turnover tax rate last year, which was later retrospectively reversed back to 0.5%. However, the growth was somewhat curtailed due to Rs1.2bn exchange loss on account of PKR depreciation. Despite claims by the Minster of Petroleum and Natural Resources to resolve the circular debt in coming weeks, the managements tone appeared not very optimistic on the near term resolution. Nevertheless, with sequential improvement expected in sales volumes, increased margins on regulated products along with rising margins on furnace oil and a possible reversal of exchange losses due to strengthening of Rupee; it is expected strong earnings momentum to continue. The dismal performance was mainly due to the companys decision to cut fuel supplies to power utilities towards the end of September amid non payment of over due amount. OGDCs profit after tax stood at Rs21.9bn (EPS of Rs5.10) against earnings of Rs16.7bn (EPS of Rs3.89) in 1QFY11, a growth of 31%YoY. The announcement came in higher than analyst consensus. The major deviations from our estimates are 1) Other Income rising by 280%YoY to Rs2.3bn (vs. our estimate of Rs1.5bn) and 2) lower effective tax rate of 29.5% compared to our anticipated rate of 33.5%. Net revenues for the period witnessed a growth of 13%YoY to Rs44.7bn owing to higher international crude oil prices and improved gas production. Operating expenditure rose by 21%YoY, however absence of any dry well contained exploration expenditure at Rs665mn (down 74%YoY). National Bank announced its 9M2011 earnings today, reporting flat earnings of Rs11.4bn (EPS Rs6.78). In 3Q alone, the earnings remained lower by 14%QoQ to Rs3.3bn (EPS Rs1.97). The company did not announce any payout with the result. Key highlights for the 3Q include 1) a decline of 11%QoQ in net interest income and 2) a substantial decrease of 46% in the non interest income. However, some support came in from declining operating expenditures which came in at Rs7.7bn, down 6%QoQ.