Indices back in red zone

Market once more had a steep fall during the week despite a short stint of recovery witnessed last week.

As evident, the continuous decline in global stock markets coupled with increased pessimism over corporate earnings outlook lead for another sharp downfall in the market resulting in the ASPI sliding to levels, which hadn’t seen for nearly 3 years.

The indices on Thursday ended down sharply with both the price indices falling by around a significant 4.5% while ending up slightly higher on Friday with marginal gains. At the end of week’s trading the ASPI (All Share Price Index) lost 168.0 points or 8.4% to stand at 1830.8 points while the more liquid MPI (Milanka Price Index) declined by 173.4 points or 7.8% to close at 2062.5 points.

Dominating this week’s market turnover was AEC (Associated Electricals) with a total contribution amounting to Rs. 213.4 million. The counter traded 0.1 million shares during the week whilst trading the bulk of 0.08 million shares on Wednesday. The counter also became the highest price gainer for the week with the AEC share appreciating by a notable 5.3% WoW to close at Rs.1800.00 per share on Friday.

Investor interest on the high cap counter JKH drove up market turnover levels by Rs.170.0 million during the week amidst considerable trading on the stock throughout the week. JKH share having fluctuated within a wide price range of Rs.63.00 & Rs.73.00 continued to decline by a substantial Rs.7.50 or 10.3% to close at Rs.65 with over 2.5 million shares being traded during the week.

In addition, Ceylinco Insurance saw a large block of shares transacting on Thursday, which added approximately Rs.103.0 million to the day’s turnover.

The transaction saw 0.5 million of Ceylinco Insurance shares switching hands at a price of Rs.205.50 per share. The total number of Ceylinco shares traded during the week amounted to 0.51 million, which were traded within the price range of Rs.202.00 and Rs.203.75 per share. The counter meanwhile dipped 3.7% WoW to close at Rs.202.00 per share.

Chevron, which attracted some interest during early part of the week with the release of its 3rd quarter earnings, contributed Rs.96.5 million towards the weekly turnover, while the total volume trade of the counter stood at 0.9 million shares for the week. Share price of Chevron fell by a considerable 12.0% WoW to Rs.93.25 per share after being fluctuated between the prices of Rs.92.00 and Rs.108.00 per share.

Activity levels improved somewhat this week, fuelled by couple of big transactions. Hence the total turnover for the week stood at Rs.1.1 billion witnessing a significant WoW improvement of 165%. Meanwhile the average daily turnover surged by 112% to Rs.226.4 million for the week.

Foreign activity improved during the week with overseas investors being heavier on selling side. Foreign sales showed a mammoth 309% increase to Rs.459.0 million with the majority trading taking place on Wednesday while foreign buying amounted Rs.113.7 million, up marginally by 11% compared to last week’s levels. Foreign participation of total activity stood unchanged at 25.3% for the week.

Dialog, Piramal Glass, Asiri Surgical and Vallibel were among the most heavily traded stocks during the week.

Point of view

More volatility expected

As expected by us, the market experienced further swings mainly in the back of unsettled global financial markets. During the week All Share Price Index (ASPI) shed 8.4% while the Milanka Price Index (MPI) lost 7.8% compared to last week’s closing level.

We expect the indices to remain volatile in the coming week in the back of shaky global/regional equity markets.

Meanwhile the budget 2009 and quarterly earnings reports (3Q of 2008) are expected to come over the next few weeks and we believe these would provide investors with some sort of direction on the market. Nevertheless we don’t expect a major change in the prevailing week investor sentiment, thus we advise investors to take a cautious approach in the marketplace.

“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.