Momentum disturbed amid month end profit taking

Market slowed down this week as profit taking by investors during the first four trading days eroded some of the gains from last week’s strong rally.

However the bourse returned to its bullish trend on Friday as bluechips coupled with retail interest on mid cap counters lifted market momentum. Week on Week (WoW) the ASPI (All Share Price Index) declined by a marginal 0.2 percent or 4.8 points to close the week at 2452.0 points, while the MPI (Milanka Price Index) dipped by 1.4 percent or 37.4 points to close at 2727.5 points.

For the fourth consecutive week, JKH took the lead in terms of turnover as the counter injected Rs. 336.8 million to the week’s market turnover (representing 9.8 percent of total weekly turnover).

Despite high activity, JKH share closed Rs. 2.00 or 1.5 percent lower at Rs. 136.00 for the week on Friday. In total JKH traded 2.5 million shares for the week within a range of Rs. 132.75 and Rs. 141.00 per share with largest portion of shares trading on Monday.

Banking counter Sampath meanwhile saw 2.8 million shares trading for the week contributing Rs. 306.1 million towards this week’s turnover. The counter showed a 3.7 percent decline in share price to close the week at Rs. 110.75 per share, while trading at a high of Rs. 117.00 and a low of Rs. 110.25 per share for the week. Few large crossings on Sampath were seen on Tuesday, with selling party being foreign.

Kotmale Holdings (LAMB) emerged this week’s third largest contributed stock with a large deal going through on Thursday. A stake of 29.9 percent of LAMB consisting 9.4 million shares switched hands at a price of Rs. 22.00 per share on Thursday, which was bought by Kshatriya Holdings through its subsidiary First Capital Holdings PLC. The LAMB price appreciated by 2.0 percent WoW to close at Rs. 12.75 per share with 11.8 million shares trading for the week while making a Rs. 240.4 million contribution to turnover.

Renewed interest was seen on Ceylinco Insurance (CINS) shares this week with share price appreciating by a notable 8.1 percent to close at Rs. 174.00 per share. CINS saw 0.9 million of its shares trading for the week contributing Rs. 156.7 million towards weekly turnover. Share price of CINS traded between a wide price band of Rs. 161.00 and Rs. 175.00 per share during the week.

Total market turnover for the week moderated to 3.4 billion this week compared to Rs. 6.8 billion recorded last week. The average daily turnover for the week amounted to Rs. 684.8 million, which was a 49.4 percent reduction from Rs. 1.4 billion witnessed last week.

Foreign participation remained low this week standing at 18.8 percent of total activity compared to 36.8 percent last week. Both foreign purchases and foreign sales were below levels witnessed during last week.

Foreign purchases for the week amounted to Rs. 569.0 million, while foreign sales stood at Rs. 715.1 dominated by foreign selling on Sampath Tuesday. As a result the net foreign outflow this week amounted to Rs. 146.1 million.

Kotmale Holdings, Nawaloka, Piramal Glass, Marawila Resorts, Eden Hotel Lanka were among the highest traded stocks for the week.

Point of View

Market to regain momentum

Profit taking ahead of month-end settlements disturbed market momentum this week with indices losing ground during the first four days. However, Week on Week ASPI closed flat amidst strong gains on Friday. We expect the market to regain momentum over the coming week with improved activity levels as investors come in fresh after a week of profit taking.

Although the crucial IMF loan has seen procedural delays, the expectations of post-war growth prospects drawing more foreign investments we believe will keep the market upbeat.

Further, as we mentioned last week the market is poised for a possible re-rating and to sustain the same on improved sentiment given the absence of war situation. Therefore, we advise the investors to collect fundamentally sound stocks with a medium to long-term view.

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