Renewed interest for plantation stocks

Market continued its dull performance throughout the week with the ASPI drifting down on a row till Thursday but reversed the direction slightly on the last trading day of the week gaining 2 points despite rising uncertainty in the macro environment.

Market opened 6.13 points lower on Monday and on close market had collectively lost 24.6 points for the week. Hence the ASPI (All Share Price Index) dropped by 0.95 per cent to close at 2560.2 points while the more liquid MPI (Milanka Price Index) declined by 33.7 points or 0.99 per cent to close at 3374 points.

Banking counter DFCC edged out in terms of the highest turnover for the week having traded almost 1.4 million shares to generate a contribution of Rs. 171.6 million representing an almost 13.7 per cent of total market turnover.

During the week DFCC share traded between a high of Rs. 132.50 and a low of Rs. 125 before closing at Rs. 125, down by a notable 5.8 per cent.

Revived retail attention pushed Tokyo Cement on top with a total contribution of Rs. 84.5 million towards this week’s turnover. During the week 3,141,00 shares of Tokyo Cement were traded within a price band of Rs. 230 and Rs. 255 per share. The stock witnessed a 2.7 per cent price appreciation over the week’s trading to conclude at Rs. 253.75 per share.

There was renewed interest for plantation stocks this week thus Malwatte emerged as the 3rd largest contributor towards the weekly turnover with a total of Rs. 69 million.

Sudden attention on the stock lead to approximately 2.36 million Malwatte shares trading during the week between a price range of Rs. 24.75 and Rs. 31.50, while closing the week at Rs. 30.50 up by a significant 19.6 per cent.

The other banking counter to demonstrate high turnover for the week was Commercial Bank with a value of Rs. 61.9 million. The stock saw nearly 4.33 million shares getting traded with the share price in the range of Rs. 140 and Rs. 144.75 per share. Commercial share picked positively during the week to close at Rs. 143.75, up 1.2 per cent WoW.

Trading levels over the weeks have seen a slight slowdown amid low activity during the early part of the week, which managed to pickup towards the latter part.

On Friday the market managed a turnover of Rs. 494 million pushing the total turnover for the week to Rs. 1.25 billion nevertheless down by 43.2 per cent WoW. Meanwhile the average daily turnover figure stood at Rs. 250.6 million for the week.

Inactive foreign contribution was witnessed over the week where foreign participation of total activity stood at just 20.6 per cent compared to 42.7 per cent posted during the previous week.

Total foreign purchases & sales dropped by 69.7 per cent and 77 per cent to Rs. 341 million and Rs. 175 million respectively thus producing a relatively low net foreign inflow of Rs. 165.7 million. Heavily traded stocks during the week were Vallibel, Amana, Sierra Cable and Malwatte plantation.

Indices continued to fall during the week amid a bomb attack in Nugegoda targeting civilians and deteriorating economic indicators such as interest rates and inflation. However retail trading witnessed an improvement this week with selected sectors such as plantations capturing investor attention. Overall the market shed 24.6 points compared to last week’s closing levels.

In the week ahead, we expect the investor sentiment to remain negative with indices likely to be in the red. However trading opportunities would continue to exist in the market place, thus we advise investors to closely monitor the market in order to capitalise on these opportunities.

As expected by us, the Colombo Consumer Price Index (CCPI) continued to go up in the back of higher food prices during November 2007. During November the annual average inflation based on CCPI stood unchanged at 17.7 per cent compared to October. Furthermore point-to-point inflation during November declined marginally to stand at 19.4 per cent compared to 19.6 per cent a month ago.

The increase in the CCPI during November 2007 was mainly due to the rise in prices of key food items. The increase in food index accounted for more than 83 per cent of the November inflation.

The rise in the food index was fuelled by the increase in prices of variety of food items such as rice, bread, coconuts, pepper etc. Furthermore fuel and light and miscellaneous sub indices also increased during the period under review.

In our opinion the CCPI index would continue to rise in the coming month fuelled by higher food prices expected due to seasonal demand.

According to our projections both annual average and point-to-point inflation is likely to increase further to 17.8 per cent and 20.2 per cent respectively in December.

This information has been compiled from sources that we believe to be reliable but we do not hold 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. All opinions, views, findings and conclusions included in this report constitute our judgement of this date and are subject to change without notice.