Stocks gain amidst IMF hopes

At a glance

* ASPI closed the week: 76.5 points

* MPI closed: 2524.8 points

* JKH second highest traded stock: Rs.435.5 million

* NDB’s turnover: to Rs.119.7 million

* Distilleries contributed: Rs.98.1 million

*Foreign purchases: Rs.406.3 million

*Foreign sales: Rs.485.1 million

* Turnover for the week: Rs.2.2 billion

* Average daily turnover: Rs.440.1 million

Market returned to its upward trend during the week in the midst of bargain hunting, as investors expected a positive outcome on the IMF bailout soon. Stocks turned up on Friday after two days of flat trading as retail interest lifted stocks higher on improved activity. The All Share Price Index (ASPI) closed the week up by 76.5 points or 3.5 percent to close the week at 2254.6 points. Meanwhile the more sensitive Milanka Price Index(MPI) closed at 2524.8 points rising by 77.2 points or 3.2 percent compared to last week’s closing levels.

Fundamentally sound blue chip counters continued to dominate market activity for yet another week. The top listed conglomerate stock JKH was the key contributor to this week’s market turnover dominating activity throughout the week. WoW counter gained 4.7 percent to close at Rs.116.25 per share whilst trading within a price band of Rs.111.00 and Rs.116.50. JKH stock was the second highest traded stock with 3.8 million shares while accounting for Rs.435.5 million of week’s turnover.

Banking stock NDB managed to retain investor interest as counter saw 1.0 million of its shares trading for the week becoming the second highest turnover contributor. NDB share appreciated by an impressive 5.7 percent during the week to close at Rs.125.75 per share, with the share price reaching a high of Rs.126.00 and a low of Rs.118.00 per share. Over the five trading days NDB’s turnover amounted to Rs.119.7 million with the bulk of the activity taking place on Friday.

Meanwhile another blue chip stock Distilleries saw 1.2 million of its shares changing hands for the week, peaking at a high of Rs.84.00 per share on Monday. The counter closed the week at Rs.79.00 per share, showing a WoW appreciation in share price by 2.5 percent. Distilleries contributed Rs.98.1 million towards the weekly market turnover.

Renewed interest was seen on the midcap stock C.W.Mackie with its share price appreciating sharply over the week by 22.1 percent to close at Rs.29.00 on Friday. The counter traded at a high of Rs.29.25 per share and a low of Rs.24.00 per share for the week with 2.9 million shares trading for the week.

Turnover for the week stood at Rs.2.2 billion, 17.4 percent lower than the Rs.2.7 billion recorded last week. Meanwhile the average daily turnover for the week stood at Rs.440.1 million.

Foreign participation for the week stood low at 20.2 percent of total activity this week compared 29.9 percent recorded last week. Foreign purchases stood at Rs.406.3 million, while foreign sales stood at Rs.485.1 million. The resultant net outflow amounted to Rs.78.8 million.

The highest traded stock for the week volume wise was Dialog, JKH, C.W.Mackie, Lanka Cement and Nawaloka.

Point of View

Momentum likely to pick up: look for bargain opportunities

Market recovered from last week’s losses as bargain hunters aggressively collected blue chip stocks. During the week the ASPI edged higher by 3.5 percent compared to last week’s closing levels.

We expect the market momentum to pick up during the coming week as investors are expecting a final decision on the IMF bailout soon.

In our opinion IMF facility could play a crucial role when it comes to the stability of the currency and more importantly the existing trend in interest rates.

Therefore we advise investors to closely monitor this matter, as it would act the main factor in determining the short to medium term market direction.

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