Few big deals boost activity levels
Mixed sentiments prevailed in the market during the week, as market
responded positively to easing interest rates that came soon after
Central Bank cut its Penal rate. However the indices ended lower Week on
Week with ASPI (All Share Price Index) closing the week at 1621.8 points
down by 0.68% compared to last weeks closing levels. Meanwhile the MPI (Milanka
Price Index) stood at 1672.4 points at Friday’s close, a 1.5% dip.
The blue chip counters DFCC, JKH and NDB took the forefront this week
in terms of contributions towards market turnover supported by several
large transactions. The banking sector stocks DFCC and NDB made
considerable contributions towards the week’s turnover with DFCC leading
the way. DFCC saw 9.8 million shares trading for the week contributing
Rs.669.0 million towards weekly turnover.
The counter closed unchanged from last week at Rs.67.00 per share.
NDB meanwhile saw its share price drop by 0.5% Week on Week to close the
week at Rs.95.00 per share, contributing Rs.204.6 million towards weekly
turnover. NDB Bank saw 2.2 million of its shares trading for the week,
of which 2.1 million shares went as a crossing at Rs.95 on Wednesday.
The market heavyweight stock, JKH saw considerable trading during the
week attracting large trading volumes on Wednesday and Thursday.
The share traded between a range of Rs.55.50 and Rs.59.00 per share,
contributing Rs.369.0 million towards weekly turnover. Approximately 6.6
million of JKH shares changed hands while the share price appreciated by
1.3% during the week.
Meanwhile Commercial Bank saw 0.4 million of its shares trading for
the week, amounting to Rs.34.9 million in turnover. The counter closed
the week at Rs.78.00 per share, showing a Week on Week decline in share
price by 2.2%.
Market turnover during the week was largely supported by the
crossings on DFCC, NDB and JKH leading to a sizable increase of 614.7%
totaling to Rs.1.5 billion for the week. The average daily turnover
stood at Rs.306.5 million as against last week’s Rs.53.6 million.
Foreign sales were sizably up this week to stand at Rs.1.2 billion
due to the earlier mentioned crossings, while foreign purchases too saw
a noticeable increase to stand at Rs.705.8 million for the week. Hence,
foreign investors became net sellers for the week amounting to Rs.518.3
million. Foreign participation for the week improved substantially to
63.0% of total activity, compared to last week’s participation level of
17.5%.
Volumes wise, the highest traded stocks during the week were DFCC,
JKH, NDB and Dialog.
Point of View
Look for bargain hunting opportunities
Indices lost marginally during the week as investors remained
cautious amidst macro uncertainties. However we saw monetary authorities
cutting penal interest rates by 175 basis points as a result of their
efforts to bring rates down to facilitate the economic growth.
We feel the market sentiment could get a boost if interest rates
continue on a declining trend in the medium term, thus we advise
investors to carefully look for bargain hunting opportunities in the
market place.
Listed company profits slump in 4Q 2008
High inflation, interest rates and energy prices took a toll on
listed company profits as 4Q2008 earnings slumped by 70% Year on Year (YoY).
Sectors such as telecoms, plantations, banking & finance and
manufacturing lead the fall in corporate earnings while most other
sectors saw their profit margins coming under pressure.
Quarterly earnings movement in 2008
Source: Company Data, Acuity Stockbrokers
We expect the impacts of harmful economic conditions that prevailed
in 2008 would continue to hurt corporate earnings in the short to medium
term; therefore it is likely that the profitability of listed entities
would remain under pressure especially during the 1st half of 2009.
However we believe the earnings should recover towards the later part
of 2009 as improvements in key variables like inflation, interest rates
and oil prices would positively impact the profit margins of companies.
Note
Our sample in calculating the corporate earnings included 85 listed
companies.
These stocks accounted for around 75% of total market capitalization
of CSE.
The information contained herein has been compiled from sources that
Acuity Stockbrokers (Private) Limited (ASB) believes to be true and
reliable but we do not hold ourselves responsible for its completeness
or accuracy. No matter published herein create any liability of any kind
on ASB. All opinions, views, findings and conclusions included in this
report constitute ASB’s judgment of this date and are subject to change
without notice.
ASB has the sole copyright for this report and the information and
views contained cannot be reproduced or quoted in part or whole in any
form whatsoever without the written permission from ASB.
At a glance
Top contributors:
DFCC - Rs.669.0 towards weekly
NDB - Rs.204.6 million towards
JKH - Rs.369.0 million towards
weekly turnover
Commercial Bank - Rs.34.9 million
Average daily turnover - Rs.306.5 million
Foreign sales - Rs.1.2 billion
Foreign purchases - Rs.705.8 million
Highest traded stocks - DFCC, JKH, NDB and Dialog
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