Stocks slide amidst profit taking

The market ended in negative territory after a four-week winning streak. Profit taking on selected blue chip counters caused the stocks to retreat with the two indices showing a downward trend during most part of the week.

The ASPI (All Share Price Index) declined by 3.3% to 1762.1 points while the more liquid MPI (Milanka Price Index) shed 6.0% to close at 1846.6 points for the week.

Ceylinco Insurance came out on top in terms of market activity, generating a contribution of Rs. 71.2 million, while trading a volume of 0.4 million for the week. Of the total Ceylinco Insurance turnover the major portion came on Monday on the back of a 0.3 million share trade that went through at a price of Rs. 175.00 per share. The stock fluctuated between a broad price range of Rs. 156.00 and Rs.175.00 per share before closing 0.1% lower at Rs. 174.75 on Friday.

The blue chip JKH managed to retain investor interest trading 0.6 million shares for the week. However, the price showed a sizeable 10.5% dip to Rs. 59.50 that came along with some profit taking on the counter. The counter during the week traded within a wide price range of Rs. 58.25 and Rs. 67.50 per share while accounting for a contribution of Rs. 39.8 million towards the weekly turnover.

Retail investor hot pick Lanka Cement remained among the most active stocks with a turnover of Rs. 33.4 million for the week. The stock price appreciated by a modest 5.8% to close at Rs. 13.75 on Friday with almost 2.5 million shares changing hands during the four trading days.

Renewed interest was seen on Ceylon Tobacco (CTC) this week as the price appreciated by a modest 2.8% to Rs. 83.25 per share WoW.

The week saw over 0.3 million Ceylon Tobacco shares trading, totalling to a turnover of Rs. 26.8 million. Meanwhile, during the week’s trading CTC share touched a highest price of Rs. 90.00 and a lowest of Rs. 80.25 per share.

Retail investors who dominated the market trading over the past few weeks were seen adopting a wait and see approach this week. Market activity levels this week showed a decline of 57.0% to Rs. 407.8 million compared to Rs. 948.5 million last week.

The average daily turnover for the week stood at Rs. 102.0 million, as against Rs. 189.7 million week ago.

After three weeks of net selling foreign investors reversed its position as net buyers amounting to Rs. 4.5 million this week. Foreign purchases for the week stood at Rs.52.9 million, while foreign sales totalled Rs. 48.4 million. The foreign participation for the week was 12.4% of total activity showing a marginal increase compared to 12.1% witnessed over last week. Dialog, Lanka Cement, Reefcomber and Laxapana were among the highest traded stocks for the week.

Point of View

Indices to move sideways

Indices moved towards negative territory as investors adopted a defensive approach amidst earnings woes.

Overall during the week the All Share Price Index (ASPI) declined by 59.1 points while the sensitive Milanka Price Index (MPI) lost 118.4 points compared to last week.

We expect the pressure on indices to continue in the coming week as investors cautiously await positive news from the macro front. Nevertheless, we advise investors to carefully monitor the corporate performances and collect fundamentally strong undervalued stocks with a medium to long-term view.

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