Govt’s efforts would drive investor confidence

The Colombo bourse held ground for the week despite profit taking by retail investors at regular intervals.

Stocks ended on a high note Week On Week amid moderate falls in the market indices on Tuesday and Friday respectively.

After dropping considerably during latter part of last year the ASPI (All Share Price Index) regained 15.3% on its first month trading in 2009 while the MPI too moved up by a similar 15.8% driven largely on improved retail interest.

Comparing Week on Week (WoW) the ASPI increased by 3.4% to close the week at 1821.2 points, while the MPI rose by 1.82% to close at 1965.0 points.

The blue chip JKH continued to top the turnover for the 3rd consecutive week, recording Rs. 91.8 million after trading 1.3 million shares for the week. JKH witnessed 82.2% of its turnover coming on Monday.

The shares of JKH traded within a wide price band of Rs. 66.00 and Rs. 73.00 per share during the week, however to close Rs. 2.75 down at Rs. 66.50 per share. Profit taking along with the release of its 3rd quarter earnings, which showed a 44% dip lead JKH share to shed 4% WoW.

The week also saw active trading on Lanka Cement, supported by anticipation of a resumption of the operations of its defunct plant in Kankesanthurai, which lies on a high quality limestone deposit. The share traded at a high of Rs. 13.75 per share and a low of Rs. 10.25 per share, contributing Rs. 77.6 million towards weekly turnover. 6.2 million of Lanka Cement shares were seen trading for the week, closing a significant 26.8% higher at Rs. 13.00 per share.

Renewed interest was seen on Asian Hotels and Properties this week, as the share price appreciated by a notable 9.4% to close at Rs. 32.00 per share, reaching a highest of Rs. 32.50 and a lowest of Rs. 29.50 per share for the week.

Around 2.0 million of its shares traded for the week contributing Rs.62.1 million towards weekly turnover.

The telecom counter Dialog meanwhile saw a large quantity of 12.0 million shares trading for the week with the share price unchanged WoW to close at Rs. 5.25 per share, while trading at a high of Rs. 6.00 and a low of Rs. 5.00 per share for the week. Contribution towards weekly turnover from Dialog amounted to Rs. 60.8 million. The bulk of Dialog trading came on Friday.

Activity levels were up this week by 9.3% compared to last week with turnover totaling Rs. 948.5 million for the week. The daily average turnover stood at Rs. 189.7 million, compared to Rs. 173.6 million recorded during last week.

Foreign participation for the week was low at 12.1% of total activity this week compared to 18% recorded last week.

Foreign purchases stood at Rs. 81.7 million, while foreign sales stood at Rs. 147.5 million. The resultant net outflow amounted to Rs. 65.8 million completing three consecutive weeks of net foreign selling.

The highest traded stocks for the week were Dialog, Lanka Cement, Seylan Bank (Non Voting) and Overseas Realty.

Market continued on its positive trend with retail investors aggressively collecting discounted stocks. Overall during the week the All Share Price Index (ASPI) gained by 59.4 points while the Milanka Price Index (MPI) rose 35.2 points compared to previous week’s closing level.

In the coming week we expect more corporate earnings reports to come to the market thus the volatility in indices is likely to continue as investors react to fourth quarter performance of specific companies. Considering the adverse economic conditions prevailed through the year 2008 we expect the negative earnings trend that we saw in the 3rd quarter to continue in the final quarter as well.

Nonetheless, with the market having already taken into account of the gloomy earnings outlook to a greater extent, we believe that the overall market direction is more likely to be shaped by other macro factors; especially the efforts of the troops to further consolidate the military advances.

However, more importantly the Government’s efforts to bring about normalcy to peace loving people and stimulate agro economy in the Northern province would be vital to drive confidence among investor as well as the international community.

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