Amidst bargain hunting:

Indices gain ground

Indices showed slight week-on-week improvement this week in spite of showing a downward trend during the early part of the week. Low market sentiments driven by the developments in the political scenario over the past few weeks were seeing easing off as market yet again bounced back into activity in the last trading day of the week.

Attention this week yet again fell on JKH, driven by two crossings on consecutive days, Monday and Tuesday. The trades managed to boost the week’s turnover, contributing Rs.1.1 billion, while 7.8 million shares were traded in total for the week

The ASPI (All Share Price Index) closed the week at 2979.4 points up by a modest 67.8 points or 2.3 percent compared to last week, while the MPI (Milanka Price Index) showed a similar movement rising by 121.2 points or 3.7 percent to 3395.9 points.

Attention this week yet again fell on JKH, driven by two crossings on consecutive days, Monday and Tuesday. The trades managed to boost the week's turnover, contributing Rs.1.1 billion, while 7.8 million shares were traded in total for the week. For the third consecutive week JKH was the highest contributor towards turnover, while the share price witnessed a slight appreciation rising by 3.6 percent to close at Rs. 145.00 per share, while within the week the counter was trading at a price range of Rs. 135.75.

A 1.7 million quantity of Diversified sector counter, Hemas, traded at a price of Rs. 125.00 per share on Wednesday. The trade which saw a contribution of Rs. 212.5 million, this led Hemas to become the week's second highest contributor with a total contribution amounting to Rs. 214.4 million, while trading a total of 1.7 million shares for the week. Meanwhile share price of the counter closed unchanged for the week at Rs. 125.00 per share.

Construction sector counter Dockyard gained investor interest with 1.2 million of its shares trading this week.

The counter contributed Rs. 204.8 million towards weekly turnover with the share price showing modest movements during this week.

The counter closed the week at Rs. 185.00 per share, improving by 5.7 percent from last week, while within the week the counter was seen trading at a high of Rs. 188.50 per share and Rs. 174.00 per share.

Apart from the JKH, Hemas and Dockyard counters the contribution from other stocks remained quite low. Banking stocks such as Commercial, HNB (Non Voting), Nations Trust and Sampath were amongst the top 10 contributors for the week, which saw a combined contribution of Rs. 297.4 million for the week.

Contrary to the modest upward movement in indices, the volumes saw a deteriorating trend as week progressed. However the early market activity consisted of two strategic deals on JKH which boosted market activity on Monday and Tuesday. Turnover for the week showed a 14.9 percent growth compared to last week to stand at Rs. 2.9 billion.

The average daily turnover for the week amounted to Rs. 583.9 million. Foreign activity meanwhile accounted for 14.8% of total turnover whilst foreigners remained net buyers for the week with Rs. 23.8 million net inflows.

Volume wise the highest traded stocks for the week were JKH, Janashakthi Insurance, Dialog, Kshastriya Holdings and Tess Agro.

Point of view

A longer term view, a timely requirement

The week ended 13/11/2009 saw the ASPI moving from 2911.6 to 2979.4 amounting to 67.8 points.

The MPI moved 121.2 points. Due to the heavyweight JKH, the first two days of the week witnessed the ASPI moving down with relatively high turnover and activity.

The next two days were a slight climb albeit less activity in the market. It was evident that the investors were cautiously waiting till the market dipped further to make a bargain purchase.

When considering the recent movement of the bourse, it is evident that the investors carry a very short-term view over the market. They mostly look to a short-term gain over a gain through a long-term investment. However, from a fundamental perspective the market could offer better returns if the investors were more medium to long-term focused. Hence, the current investors' process will impede a potentially higher yield, which could have been gained through a longer term view.

The latest quarterly earnings of most of the companies have shown a positive picture, either by way of increasing profits or by reducing the previous quarter losses. Hence, such companies will have the potential to capitalize on the expected economic revival going forward. Thus, it's our earnest request for the investors to create a long-term view of the market (as compared to a short-term quick return), which invariably will result in better yield.

Albeit the latest developments from the political landscape, the end of the war has given hope on an economic revival, with the corporate earnings improving, downward pressure on inflation, presently stable exchange rate etc. Hence, we will hope that the light at the end of the tunnel is not far.

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.

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