Indices soar

Investors snap up blue-chips:

Point of View

Sentiment to remain bullish amid strong activity

As we expected the positive trend continued in the market with significant buying pressure building up on fundamentally sound counters leading the indices and turnover levels to record sharp increases from last week. Week-on-Week ASPI gained 8.0 percent, while MPI increased 6.3 percent with the average daily turnover standing at 1.1 billion.

We expect this investor enthusiasm to continue in the coming weeks, but with a mix of profit taking and bargain hunting. As we highlighted last week the positive economic outlook at present is lending significant support for the bourse and in the short run the investors will remain focused on economic aspects that set the direction for long-term corporate earnings.

Furthermore, the new initial public offerings (IPOs), which are currently on progress we believe would lift the attractiveness of the market and seize attention of more new investors. While we envisage profit taking by investors on selected counters due to sharp price gains in recent times, it is likely that the bargain hunters will halt any sharp decline in indices. Thus we advise the investors to stick to fundamentally sound stocks. 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.

A clear shift in investor interest towards fundamentals was seen this week as activity on market heavyweight counters climbed with notable gains in prices. The surge in overall stock prices on the back of high investor confidence pushed the MPI above 3000 points this week while the ASPI reached the highest levels since May 2007. Comparing Week on Week (WoW) the ASPI (All Share Price Index) increased by a sizeable 209.6 points or 8.0 percent to close the week at 2840.3 points, while the MPI (Milanka Price Index) rose by 187 points or 6.3 percent to close at 3170.6 points.

The highest capitalized stock at the Colombo bourse; JKH became the number one contributor to this week’s market turnover with Rs. 833.2 million or 14.8 percent of weekly turnover.

JKH witnessed several crossings taking place this week, with the major part of Rs. 443.9 million coming on Thursday.

Approximately 5.8 million JKH shares traded for the week while share price rose 7.9 percent WoW to close on Friday at Rs. 146.25 per share after trading between a range of Rs. 136.00 to Rs. 149.00 per share over the week.

Heavy investor interest was witnessed on banking sector counters, with the four largest listed banking stocks coming among the top 10 contributors while showing positive price movements. Amongst banking stocks, Commercial Bank (COMB) was the highest contributor amounting Rs. 357.8 million this week, which observed a 8.9 percent increase in price compared to last week to close at Rs. 165.00 per share.

Sampath, DFCC, HNB (Non Voting) injected Rs. 187.8 million, Rs. 163.2 million and Rs. 120.7 million respectively towards week’s turnover with share prices improving by impressive 16.6 percent, 7.0 percent or 22.9 percent to close at Rs. 170.00, Rs. 148.25 and Rs. 77.75 share price.

Dockyard (DOCK) became the fourth highest contributor towards the total market turnover this week with a turnover of Rs. 178 million on a volume of 1.1 million shares. DOCK which has seen its price improving rapidly over the last couple of weeks appreciated by another 20.4 percent during this week to close at Rs. 170.00 per share. Over the week DOCK shares traded within a highest price of Rs. 172.00 and a lowest price of Rs. 141.25.

Total turnover for the week recorded at Rs. 5.6 billion, showing an increase 82.8 percent compared to last week’s Rs. 3.1 billion. Average daily turnover for the week stood at a noteworthy Rs. 1.1 billion.

Foreign participation remained slightly higher this week amounting to 15.6 percent of total activity compared to 14.5 percent posted during last week. Nonetheless, foreign investors were net buyers this week amounting to Rs. 108.7 million.

The highest traded stocks in terms of volume were Nawaloka, Blue Diamond (Non Voting), Blue Diamond (Voting), Seylan Merchant (Non Voting), Reefcomber and Piramal Glass.