Monday, August 1, 2011

Confidence in equity markets to remain

The market edged up significantly with both the ASPI and MPI recording a week on week gain to close at 6,845.38 and 6,210.07, respectively. The ASPI increased by 4.71 percent and the MPI increased by 2.99.

The weekly turnover value recorded a 43.98 percent increase to Rs 9.73bn, amounting to a daily average value of Rs 1.95bn, when compared with last week’s daily average turnover of Rs 1.35bn. New entrant Browns Investment LTD, Swarnamahal Finance and Brown and Company PLC accounted for 17.28 percent of the week’s total turnover value. The number of shares traded increased by 89.08 percent, averaging 110.94mn shares traded daily as against 58.67mn traded last week.

The Banking and Finance sector led the turnover in value this week, accounting for 25.03 percent of turnover in value amounting to Rs 2.43bn. The Diversified sector was the second highest contributor to turnover, accounting for 18.25 percent amounting to 1.78bn. Third highest on the turnover value list was the Manufacturing sector with 10.37 percent or Rs 1.01 bn.

Volume of turnover for the week was dominated by the Banking and Finance sector with 239.86mn shares being traded or 43.24 percent of volume of turnover.

The Diversified sector followed, representing 24.74 percent of total turnover volume (137.22mn shares traded). Third highest contributor to turnover volume was the Manufacturing sector, which accounted for 8.39 percent or 46.54mn shares.

Market Capitalization as at today’s close i.e. Rs 2,444.70bn, recorded a gain of Rs 124.78bn in value or 5.4 percent as against last week’s close. Three Acre Farms was the major price gainer (68.2 percent) this week, closing at Rs 140.80 from last week’s closing price of Rs 83.70. Grain Elevators was the second largest price gainer, recording a 57.7 percent increase to close at Rs 140.80 (from Rs 89.30). Confifi Hotels gained 46.3 percent from its previous price of Rs 194.30 to close at Rs 284.20. Paragon was the major price loser over the week, declining 30.3 percent to close at Rs 1,875. Nanda Finance and AMF Co. LTD were also major losers with Nanda Finance decreasing 26.0 percent to Rs 17.1 and AMF Co declining 18.9 percent to close at Rs 465.80. J.L Morison and Abans Financial Services LTD declined 12.2 percent and 10.0 percent respectively.

Foreign investors remained net sellers closing the week with a net selling position amounting to Rs 531.68mn, relative to last week’s net selling position of Rs 571.21mn. foreign purchases for the week total to Rs 526.9mn as against Rs 658.8mn recorded last week.

Amana Takaful Insurance topped the volume list recording 157.6mn shares changing hands representing 28.41 percent of the aggregate share volume. Browns Investment LTD contributed 15.75 percent of aggregate share volume with 87.4mn shares changing hands.

Point of view

The Colombo bourse continued to slide during the first two trading days, however, recovered significantly gaining 351.8 points to close on a positive note recording a 4.7 percent gain week on week. The market was mainly driven by retail investor interest in blue chips and mid-caps with sound corporate earnings reported so far boosting investor confidence.

Sri Lanka’s sovereign ratings have been upgraded by both Fitch Ratings and Moody’s recently, while the US$ 1bn bond has attracted investor interest being oversubscribed seven times indicating investor confidence in Sri Lanka’s macro-economic outlook.

This confidence should be reflected in the Equity Markets in future and we expect the market to sustain its trend during the week ahead.
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