Market rides high on SLT

The market ended broadly higher for the week witnessing the largest ever transaction in the history of the Colombo Bourse.

The boost came on Tuesday with the market indices rising drastically in response to the sharp price gain on the telecom stock SLT following the strategic deal that triggered a mandatory offer.

Overall the indices closed significantly high with the ASPI (All Share Price Index) advancing by 60.1 points or 2.34% at 2625 points while the more liquid MPI (Milanka Price Index) rose much greater by 3.06% or 98 points to 3300.7 points at week's close.

Topping market turnover with a mega deal, SLT posted a massive Rs.33 billion turnover for the week- biggest ever recorded in the bourse's history. On Tuesday, Japan's NTT sold its 35.2% stake on SLT to Global Telecommunications Holdings for a value of Rs.32 billion, executing 635 million shares at a price of Rs.50.50 per share.

Excluding the 635 million share transaction the counter traded another 27 million shares during the week.

The share price, which had risen sharply since the news of a mandatory offer, settled at Rs.48.25 at week's close gaining 15.6%.

Apart from the quantities traded on SLT, a considerable volume of shares was seen trading on Asiri Surgical on Wednesday. Three blocks of shares adding up to a total of 30 million shares traded at a price of Rs.9 per share.

Thus the total contribution by the counter amounted to Rs.273 million placing it as the second largest contributor.

Meanwhile the Asiri Surgical share appreciated 6.7% WoW to close Rs.0.50 higher at Rs.8 per share.

Continuing to remain in the top the blue chip JKH generated a contribution of Rs.204.6 million with a volume of 1.7 million for the week. Counter, which traded between a price band of Rs.119.25 and Rs.122, closed flat from last week.

DFCC during the week added Rs.148.6 million towards the total weekly turnover with a volume of over 1.2 million shares traded for the week. The counter before closing 1.6% up at Rs.127 per share fluctuated within a price range of Rs.124 and Rs.127 per share.

Excluding the Rs.32 billion made on SLT trade the market activity for the week stood at Rs.3.16 billion, up 28% compared to Rs.2.47 million last week. The average daily turnover value meanwhile was at Rs.632.4 million.

Both foreign purchases and sales were heavily boosted this week attributable to the SLT deal. Removing the big trade from the foreign activity levels, purchases for the week amounted Rs.1.2 billion, up 7.3% and sales totaled Rs.581 million down 35.3% resulting in a net inflow of Rs.614.4 million.

The total foreign participation (excluding the SLT trade) stood at 28% of the total activity this week

Meanwhile the heavily traded stocks during the week were SLT, Asiri Surgical, Vallibel and Mullers.

Point of view

Activity levels to ease off

Much expected SLT deal took place during the week becoming the single biggest transaction in Sri Lanka's equity market history. Investor sentiment improved with this trade as the trade went at a price, which was higher than what the market expected. Overall the market gained by 2.34% compared to last week's closing level.

With the Sinhala and Hindu New Year expected to take the center stage next week, investors are likely to be in a holiday mood.

Thus we believe that the overall activity levels would show a decline in the coming week.

However we do not rule out the possibilities of bargain hunting opportunities, thus we advise investors to keep a close eye to capitalise on the same.