Market sentiments rise amid positive political developments

MARKET REPORT: The market rebounded somewhat this week, amid reports of the President calling for support from the main opposition party, the UNP. With a positive response to the offer coming through, both indices rose notably, compared to last week.

The ASPI (All Share Price Index) rose by 71.5 points to close at 2216.7 points, while the MPI (Milanka Price Index) closed at 2813.7 points rising by 88.9 points compared to last week. On percentage terms however the rise in the indices were smaller, with both the ASPI and the MPI rising by 3.3%, compared to last week.

Quite similar to what was witnessed last week, NDB counters became the highest traded stock for this week, amid 2.7 million of shares trading through a foreign to foreign crossing. The crossing, which took place on Tuesday, contributed Rs.419.5 million towards the day's turnover.

During the week a total of 2.8 million shares of NDB traded, contributing Rs.438.1 million towards total turnover for the week.

The share price saw a slight appreciation rising by 2.6% compared to last week to close at Rs.156 per share on Friday, while during the share traded at a high of Rs.157.50 per share and a low of Rs.153 per share.

JKH took the second slot, in terms of turnover contributions with Rs.190.5 million being contributed towards weekly turnover. Approximately 1.5 million of JKH shares traded this week, with the major part of 0.7 million shares traded on Thursday.

While interest on JKH shares was seen during the past couple of weeks, the volumes traded this week of 1.5 million shares was below last week's volumes of 2.6 million shares traded.

The share price of the counter rose slightly by 2% comparing the Week on Week (WoW) closing prices. This week the share reached a high of Rs.131 per share while the lowest traded price was Rs.127.50 per share. JKH closed the week at Rs.129.75 per share.

Interestingly enough LIOC counters witnessed renewed interest this week with 6 million shares trading during the week. Friday alone saw 5.3 million of LIOC shares trading; in the back of the company further increasing petrol and diesel prices sold through their sheds, by Rs.7 per litre.

With the media reporting a possible price hike in CPC sheds by Rs.9 per litre of petrol, investors were being hopeful that CPC would follow suit shortly with a price increase, leading to not only a situation where there would be a level playing field created, but also a scenario where LIOC would not incur further losses.

The renewed interest left prices appreciating by 6.1% to close the week at Rs.26 per share, while during the week the counter traded between the range of Rs.27 and Rs.23.50 per share.

Foreign interest yet again re-emerged on Dialog counters, as modest foreign purchases were seen on the counter this week.

The increase in interest was evident with around 4.4 million Dialog shares trading this week, compared to a mere 0.4 million shares traded last week.

The counter contributed Rs.87.4 million towards weekly turnover, closing the week at Rs.20.50 per share. WoW Dialog share prices witnessed a 3.8% growth, while trading during the week within a range of Rs.21 and Rs.19.50 per share.

Total turnover for the week amounted to Rs.1.6 billion, which was the highest weekly turnover level recorded for the month of August. Meanwhile, average daily turnover for the week amounted to Rs.326.5 million.

Approximately 25% or 1/4th of the total turnover for the week come from the above mentioned foreign crossing of NDB shares.

Foreign activity this week was led yet again by the Tuesday's NDB crossing.

Foreign purchases this week amounted to Rs.535.1 million of which Rs.411.9 million came through on Tuesday alone, while similarly the major of foreign sales, which totaled Rs.725.8 million, came through on Tuesday amounting to Rs.410.4 million.

Foreign investors for the week were net sellers amounting to Rs.190.7 million. Nawaloka, Vanik Incorporated, Vallibel, Asiri Surgical and LIOC were the volume-wise, most traded stocks this week.

The market gained 3.3% during the last week as investors viewed the developments that are taking place in the political front positively. The market activity during the week also improved significantly backed by few share crossing and increased retail participation.

Southern alliance; first step towards peace

As reported by the press, President Mahinda Rajapaksa has invited United National Party (UNP) to support the government in its efforts to finding a permanent solution for the ethnic conflict in the north and east part of the Country. According to media reports the opposition leader Ranil

Wickremesinghe has been positive in his reply to the President's invitation, which in our opinion boosted investor confidence, which had a serious setback during the recent escalation in violence.

Nevertheless, while we believe a strong southern alliance consisting the two main parties (United Peoples Freedom Alliance and UNP) would form the best combination in finding a lasting solution to the country's ethnic conflict, we advise investors not to be too optimistic at these initial stages considering the number of failed attempts made in the past to form a national government.

Furthermore in our opinion this sort of an alliance would attract more international support, which would increase the possibilities of achieving a lasting peace.

Peace signals

During the coming week we do not expect a major shift in the positive market sentiment that was witnessed during this week unless we see a further deterioration in the peace front.

Nevertheless we expect the volatility to continue in the marketplace amid likely profit taking by the investors during the coming week.

Furthermore we advise investors to keep a closer eye on the peace front and the cohabitation efforts made by the two major parties, as these developments could influence the overall market direction in moving towards positive territory.

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