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Stocks surge to all-time high

The market which remained volatile during the first three trading sessions of the week rapidly gained momentum with the start of the new month.

On Friday the CSE created history as the ASPI reached its all time closing high of 3018.0 points, against the previous high of 3016.4 points recorded on February 13, 2007. Week-on-Week ASPI gained by 126.0 points or 4.4 percent to close at 3018.0 points while the more sensitive Milanka Price Index (MPI) climbed up by 127.5 points or 3.9 percent to close the week at 3394.9 points.

Seemingly underlying interest on Seylan Bank (SEYB) Non Voting counter propelled it to become the largest contributor to turnover during last week, amid an oversubscribed public issue of SEYB voting shares.

The counter also became the highest traded stock for the week, while its share price appreciated by a notable 24.5 percent WoW, to close at Rs.16.50 per share on Friday.

Total number of Non Voting shares traded amounted to 50.7 million, accounting for a contribution of Rs.780.0 million during the week.

Meanwhile the Seylan Bank Voting share recorded a turnover of Rs.115.4 million, becoming the 5th highest contributor. The share witnessed a 7.4 percent improvement in price to close at Rs.36.50 per share on Friday.

The two conglomerates JKH and Aitken Spence were next in line, injecting Rs.313.8 million and Rs.151.1 million respectively towards the week’s turnover. Both shares recorded marginal gains during the week with JKH increasing by 0.8 percent to close at Rs.154.00 and Aitken Spence gaining 0.7 percent to close at Rs.891.25.

Coco Lanka share surged 39.1 percent or Rs.12.50 WoW to close at Rs.44.50 per share, whilst trading a volume of 3.4 million shares for the week within n a price range of Rs.32.25 and Rs.46.50 per share during the week.

The stock, with a total turnover of Rs.138.5 million became the fourth largest contributor for the week.

Turnover picked up last week to Rs.4.5 billion up by a notable 62.7 percent with activity being helped largely by Seylan Bank transactions.

The largest portion to week’s turnover came during the last two trading sessions of the week. Meanwhile the average daily turnover amounted to Rs.901.5 million.

While activity increased, foreign participation levels declined to 16.2 percent of total activity this week, compared to 30.2 percent posted during last week. Foreign purchases fell to Rs.725.3 million while foreign sales remained stagnant at Rs.731.9 million, resulting in a marginal net foreign outflow of Rs.6.6 million for the week.

Among the heavily traded stocks during the week were Seylan Bank (Non Voting), Seylan Merchant (Non Voting), Colombo Land and Tess Agro.

Point of View

Sentiment to remain strong; hunt for attractive valuations

Market which remained volatile during the first three trading sessions of the week, rapidly gained momentum with the start of the new month to close the week at a historic high. Week-on-Week the ASPI gained 4.4 percent while the MPI rose by 3.9 percent with improved activity levels compared to last week.

Bullish sentiment we believe is likely to continue in the market, thus further gains in indices can be expected over this week.

The shift in investments from fixed income securities to equities on the back of falling interest rates, expectations of improved foreign buying and the anticipated economic rebound in the last quarter are the key drivers of the market at present.

Meanwhile, the investors who have been accumulating from lower price levels may look for sporadic profit taking in the event of market climbing faster than it warrants.

However, this is unlikely to affect the overall trend of the market in any major way as the investors with confidence over the long term outlook will provide sufficient support for fundamentally strong counters.

Furthermore, while the market has gained over 100 percent year-to-date, there remain a number of counters which have lagged the rapid rise of the market and still trading at attractive valuations.

Hence we advise the investors to hunt for counters with attractive valuations in key growth sectors, as disproportionately lower valuations are unlikely to last for long in a strong market.

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.

 

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