Investors take profits ahead of the long weekend

The Colombo bourse took a downturn this week on the back of profit taking observed on few blue chip stocks.

Market started off on a low note but moved to gain some ground on Tuesday, however failed to sustain the rise with the indices falling subsequently on Wednesday, the last trading day of the week.

The ASPI (All Share Price Index) closed the week down by 29.8 points or 1.16% at 2536.2 points while the more liquid MPI (Milanka Price Index) fell

by 28.1 points or 0.87% to stand at 3195.8 points at week’s close.

Topping market activity level for the third consecutive week was SLT, driven mainly on speculation to generate a turnover of Rs.1.6 billion for the week on a volume of 40.6 million shares.

Thus far, during March alone SLT’s contribution to market activity had been at a staggering 49% of total activity indicating its relative significance in driving up activity levels for the month.

The stock performed positively during the week’s trading with the share price fluctuating between a low of Rs.39.25 and a high of Rs.41.25 to close up 3.2% at Rs.40.5 per share.

Interest on the blue chip JKH remained with the counter adding up a turnover

of Rs.85.5 million while over 0.71 million shares of the conglomerate changed hands during the week. Meanwhile JKH’s share closed down 0.21% or Rs.0.25 at Rs.120 having fluctuated within a price band of Rs.119.5 & Rs.122 per share.

Commercial Bank too once again ended up on a top rank contributing Rs.29.5 million to the week’s activity. The share price was down Rs.2 to close at Rs.142 per share.

The stock before ending down 1.4% WoW traded at a peak price of Rs.143.25 and low of Rs.141 per share with nearly 0.21 million shares been traded for the week. Lanka Cement saw its share price fall 1.6% WoW to close the week at Rs.15.5 per share.

The counter transacted almost 1 billion shares over the week, becoming the 4th highest contributor, with a contribution of Rs.16.4 million. The Lanka Cement share price fluctuated within a price range of Rs.15.25 - Rs.16.5 per share.

Despite trading being limited to three days only, the bourse recorded an activity level of Rs.2.1 billion for the week, prompted mainly on investor enthusiasm on the Telco stock SLT which accounted for 76.8% of the week’s turnover.

The market activity level for the week showed a 38% decline from last week due to trading been limited to three days. Conversely, the average daily turnover for the week rose by 3.4% to stand at Rs.697 million. Foreign participation during the week stood at 54.8% of total activity, substantially higher against last week’s participation level of 37.6%,

attributing to the foreign trades on SLT.

Weekly foreign purchases were 31.6% higher at Rs.1.4 million while foreign sales totaled to Rs.852 million, down 40.9% resulting in a net foreign inflow of Rs.588 million Heavily traded stocks during the week were SLT, Vallibel, Nawaloka and Lanka Cement. Plantations likely to gain investor attention

Profit taking continued to put downward pressure on indices with turnover levels staying above Rs.600 million on a daily average basis. As expected, SLT remained the investors’ hot pick during the week. During the three days of trading the All Share Price Index (ASPI) lost 29.8 points while the Milanka Price Index (MPI) declined by 28.1 points compared to last Friday’s

closing levels. In the coming week we expect the market to remain active with SLT and plantation sector counters taking the lead. SLT prices increased sharply over the last 2-3 weeks on an expectation of a mandatory offer as a result

of a likely disposal of NTT’s 35% stake in the company. However if this

trade does not trigger a mandatory offer the prices are likely to get adjusted from current levels.

We feel investors should re look at opportunities in sectors such as plantations amid strong earnings outlook for the sector in the first quarter of calendar year 2008.

“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.