Weekly Market Review:

Market bounces back

The week started on a negative note as profit taking dragged indices lower following last week’s healthy gains. Nevertheless, the market bounced back on Wednesday

after two consecutive days of losses fuelled by falling rates on Government securities subsequent to Central Bank’s rate cuts last week.

Indices closed the week almost flat with the ASPI (All Share Price Index) dropping 6.6 points or 0.36 percent to 1838.5 points while the liquid MPI (Milanka Price Index) ended 8.2 points or 0.41 percent lower at 1963.1 points.

JKH retained its dominance in the marketplace contributing Rs.109.5 million to this week’s market turnover, amounting to almost 22.0 percent of the total turnover.

The JKH share remained slightly volatile during the week with the price fluctuating between Rs.66.50 and Rs.72.50 per share. The total JKH volume for the week amounted to 1.6 million shares and the price picked up by a noteworthy 5.9 percent Week on Week (WoW) to close at Rs.72.00 per share.

Renewed interest was seen in Hotel Services (SERV) this week in the midst of an announcement regarding a sub division of company’s shares. A total of 0.5 million SERV shares traded for the week with the bulk of the volume coming on Wednesday.

The counter contributed Rs. 77.3 million towards the weekly turnover, while its share price moved lower this week by 11.9 percent to end the week at Rs. 149.75 per share on Friday. The share price of SERV hit a high of Rs. 160.75 per share while trading at a low of Rs. 145.00 per share for this week.

The high cap Ceylon Tobacco (CTC) was also among the top contributors for the week, with the counter generating a turnover of Rs. 32.4 million. The CTC shares closed 4.8 percent up WoW at Rs.115.00 per share after 0.3 million shares changed hands during the week.

Nations Trust contributed Rs.20.5 million towards weekly turnover, with a modest 0.7 million shares trading for the week. The counter traded at the highest price of Rs. 30.25 and a lowest of Rs. 28.00 per share during the week, closing 0.1 percent up at Rs. 29.25 per share on Friday.

Activity levels reduced by 64.2% WoW to Rs. 500.8 million this week while the average daily turnover amounted to Rs. 125.2 million down from Rs. 279.8 million posted last week.

Foreign investors continued to be net sellers, totalling Rs. 58.3 million for the week. Both Foreign purchases and foreign sales were significantly lower this week. Foreign purchases stood at Rs. 62.1 million, down by 55.0% compared to last week, while foreign sales amounted to Rs. 120.4 million declining by 79.5 percent compared to last week.

This week’s foreign participation stood lower at 18.2 percent of total activity compared to 25.9 percent last week.

The most actively traded stocks during the week were Sierra Cables, JKH, Piramal Glass and Tokyo Cement.

Point of View

Rates continue to fall; time to revisit equities

The profit taking caused indices to move in to negative territory after last week’s sharp gains. During the week the market declined by a marginal 0.4 percent compared to previous week on relatively low volumes.

We expect the sentiment to turn positive in the coming week, as recent fall in interest rates have considerably improved the valuations of equities, nevertheless as we saw during this week profit taking would continue at regular intervals putting pressure on the indices.

Considering the fall in interest rates and the possible end to the war soon we advise investors to keep accumulating undervalued stocks with a medium-term view.

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.

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