Market regains after early profit taking
REPORT: Market indices, though remaining on an upward trend showed
sluggish movement during the week. Meanwhile profit taking resulted in a
slight downturn in the market on Tuesday with both indices falling as a
part of a technical correction.
However the market regained during the balance part of the week, with
both indices showing moderate movement.
Comparing Week on Week (WoW) the ASPI (All Share Price Index)
increased by a modest 1.56% to close the week at 2261.0 points, while
the MPI (Milanka Price Index) rose by 1.80% to close at 2881.5 points.
JKH witnessed notable quantities trading this week, with the major
part of 0.49 million trading on Monday. The counter was the highest
contributor towards weekly turnover amounting to Rs. 165.5 million,
while approximately 1 million JKH shares traded for the week.
JKH share price rose by 3.9% WoW to close on Friday at Rs. 161 per
share, while during the week the counter traded between the range of Rs.
165 and Rs. 151 per share.
Renewed interest was seen in Overseas Realty and Palwatte Sugar
shares this week. Overseas Realty share price appreciated by a notable
9.9% to close at Rs.19.50 per share, which was also the highest price,
reached for the week.
Around 6 million of its shares traded for the week contributing Rs.
112.2 million towards weekly turnover. Palwatte saw its share price rise
by a sizable 20.4% this week closing at Rs. 28 per share.
The counter was seen trading at a high of Rs. 28.75 per share and a
low of Rs. 22.75 per share during the week, with around 4.1 million
shares trading. The contribution towards weekly turnover amounted Rs.
108.4 million.
Lanka IOC managed to retain its share price, amid the company writing
off Rs. 7 billion of subsidy receivable against its profits for the 9
months.
While share prices fell to a low of Rs. 28 per share, prices picked
up during the week to a high of Rs. 31. The counter closed the week at
Rs. 30.50 per share down marginally by 2.4% compared to last week's
close of Rs. 31.25 per share.
Around 1.5 million of LIOC shares were seen trading for the week,
contributing Rs. 43.7 million towards weekly turnover.
Both Dialog and SLT observed lesser quantities being traded during
the week compared to last week. Approximately 3 million of Dialog shares
traded for the week, with the counter contributing Rs. 56.4 million
towards weekly turnover.
The counter was seen trading within the range of Rs. 19.25 and Rs.
18.75 per share, closing the week at Rs. 19.25 per share. Little change
was witnessed WoW in Dialog share price with the share price increasing
by a mere 1.3% during the week.
SLT meanwhile saw 2.2 million shares trading for the week with SLT
share price too showing slight movement during the week. The counter
showed a 1.3% increase in share price to close the week at Rs. 19 per
share, while trading at a high of Rs. 19.25 and a low of Rs. 18 per
share for the week.
Contribution towards weekly turnover from SLT amounted to Rs. 40.7
million.
Activity levels were sizably down this week by 39.3% compared to last
week with turnover, totalling only Rs. 1.45 billion for the week. The
daily average turnover stood at Rs. 290.36 million, compared to Rs.
485.06 million recorded during last week.
Foreign participation remained low this week amounting to 17.7% of
total activity compared to 28.1% posted during last week. Both foreign
purchases and foreign sales were below levels witnessed during last
week.
Foreign purchases for the week amounted to Rs. 253 million declining
by 51% compared to last week, while foreign sales witnessed a sizable
69% dip this week to total Rs. 260.7 million. As a result the net
foreign outflow this week amounted to Rs. 7.7 million.
The highest traded stock in terms of volume was Ceylon Glass,
Overseas Realty, Royal Ceramics, Palwatte and Cargo Boat.
Inflation declines, offers platform for stable interest rates
The inflation data released for February 2006 confirmed our view on
its declining trend as the CCPI dropped 0.3% compared to January 2006.
The annual average CCPI declined to 10.3% from 11.1% a month ago, while
the point-to-point inflation also fell to 7.1%.
A 1.35% drop in food index helped the inflation to slowdown, a trend
that we expect to continue during March as well. The prices of Rice,
Limes, Red onions, Cowpea Whole, Coconut Oil, most varieties of Fresh
Fish, Dried Fish - Sprats and Salaya, Coconuts, Eggs, Potatoes and most
varieties of vegetables helped the food index to take a breather, thanks
to improved supply of locally produced agricultural consumer goods,
specially the Vegetables to the main markets in Colombo City.
However, prices of Sugar, Lactogen, Milk Tea, Beef, Fresh Fish -
Salaya, Dried Fish - Koduwa, Firewood and Electricity have increased
during this month. In the meantime, fuel index jumped 5.66% compared to
January, off setting some part of the impact of the decline in food
index.
We project the annual average inflation to drop to 8.9% in May 2006
before returning to an upward trend due to a possible revision to
domestic fuel prices after the Local Government Elections scheduled for
March 30.
The falling inflationary scenario will help the interest rates stay
at the current levels giving some stability to the investor community.
Growth stocks still offer value
Backed by a relatively stable interest rate scenario and strong
corporate earnings, the market will retain the positive momentum in the
coming weeks.
While the 2nd round of peace talks in April expected to be neutral
(no gains nor pains), we believe that the market activity would further
pick up in the coming weeks.
We believe that many counters offer value after showing signs of
retaining the growth momentum registered in 2005. Thus we advise the
investors to carefully accumulate such growth stocks, during times of
market correction that may come due to profit taking.
This information has been compiled from sources that we believe to be
reliable but we do nothold ourselves responsible for its completeness or
accuracy. No matter published herein create any liability of any kind of
HNB Stockbrokers (Private) Limited or its associates. |