ENGRO Chemicals

ENGRO (Last: Rs 101.26, down Rs 0.93)

Avoid for passive long only investors. Sell on rise for traders.

ENGRO is making lower tops since early 2008 and recently it has started underperforming the KSE-100 Index. At this moment, the stock is showing downtrend on all three counts (short, medium and long term basis) as the two weeks moving average is trading below both 12 weeks and 52 weeks moving average. We have seen some choppy trading pattern in the recent past mainly due to the flat price action exhibited by the stock for the past six months.

In our view, for a sustainable rise, the stock must clear its major resistance zone at 115-120 level. As the moving average setup is indicating, ENGRO will resume its long term uptrend only after clearing the 115-120 resistance level.

Long term investors should avoid this stock till it declares either a long term uptrend signal or sells off to recent lows. However, for short term traders, the stock is a sell on rise till it clears Rs 120 hump. Major support prices are Rs 95, Rs 85 and Rs 70.