Bearish trend continues despite a late rally

The bearish trend continued amidst extended fears of a potential slowdown in the global economy affecting largely on investor sentiment.

Indices, which were seen shrinking to their lowest in more than three years during last week, continued incurring heavy losses at week’s beginning with the ASPI falling to levels last seen in January 2005 whilst the MPI reaching levels last encountered in July 2003. However the market recorded some gains during the latter part of the week helping to negate some of the heavy losses evident during early week.

Overall at week’s close the ASPI (All Share Price Index) shed 30.0 points or 1.8 per cent to close at 1639.9 points on Friday while the MPI (Milanka Price Index) slipped by 27.8 points or 1.5 per cent to 1842.5 points.

Out of the week’s total turnover, most part was contributed by high cap Distilleries representing 70 per cent or Rs. 749.7 million of the total weekly turnover, boosted largely by Friday’s Rs. 598 million generated by means of few large crossings.

Apart from Friday’s big trade, active trading was seen on Distilleries on most of the other days as well, as the counter saw 14.1 million of its shares changing hands during the week becoming the highest traded stock for the week. Distilleries share fluctuated within a price range of Rs. 51 & Rs. 55 per share during the week before closing marginally up by 2.8 per cent to close at Rs. 55 per share.

Few large trades on the hotel sector share Riverina boosted the activity levels and the stock made a contribution of Rs. 20.4 million towards the week’s market turnover.

The share price of Riverina saw a significant 9.5 per cent surge WoW to close at Rs. 31.75 per share for the week with over 0.6 million shares trading within a wide price band of Rs. 29 - 34.75 per share. The bulk of the Hotel sector counter’s turnover came on Tuesday.

Generating the third largest contribution to the weekly turnover was the mobile telecom giant Dialog. Approximately 3 million shares were traded during the week adding closer to Rs. 18.8 million towards the weekly market turnover. Meanwhile the Dialog share price ended the week down by 3.8 per cent to close at Rs. 6.25 per share after trading within a price range of Rs. 5.75 and Rs. 6.75.

Continued interest on Chevron saw 0.18 million of its shares switching hands for the week, helping to record week’s fourth largest turnover of Rs. 17.4 million. Shares of Chevron fluctuated between the prices of Rs. 94 and Rs. 97 per share declining by 3.1 per cent over the week to close at Rs. 94 per share.

Investors were largely inactive except for some interest on selected counters such as Distilleries. WoW activity levels increased by 73.1 per cent to stand at Rs. 1.1 billion while the average daily turnover for the week stood at Rs. 214.1 million compared to last week’s Rs. 123.7 million.

Foreign investors yet again became net sellers with a total net outflow of Rs. 750.6 million for the week. This was largely due to the high foreign selling witnessed on Distilleries share.

Sales for the week amounted to Rs. 798.2 million, up 812.2 per cent while foreign purchases stood at Rs. 47.6 million down 28.2 per cent compared to last week. Out of the total activity foreign participation was at a high of 39.5 per cent compared to 12.4 per cent last week.

Highly traded stocks for the week were Distilleries, Sierra Cables, Dialog and Janashakthi Insurance.

Point of view

Heavy volatility continued in the market place this week with no improvements in the activity levels. The All Share Price Index (ASPI) lost 1.8 per cent during the week compared to last week’s closing level.

We expect the indices to remain shaky with uncertainties prevailing in the market place. Furthermore the activity levels would remain low in the coming week, as we feel the investor community is likely to stick to a ‘wait and see’ strategy.

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 judgment of this date and are subject to change without notice.