Quarterly earnings drives market into green

Indices ended positive for the week driven by positive earnings results along with speculative interests on selected counters. The ASPI was up through out the week except on Tuesday with a slight dip of 0.7%. The ASPI (All Share Price Index) ended the week with a gain of 1.59% or 58.9 points at 3768.8 points while the MPI (Milanka Price Index) too gained by an alarming 3.02% or 127.2 points to close at 4343.0 points on Friday.

GREG was once again the highest contributor to the week’s turnover, contributing approximately Rs. 749.2 million; as the counter witnessed active trading throughout this week as well. GREG volumes for the week stood at 3.2 million, but there was volatility in share price through out the week. The counter closed at Rs 239.25, with the share price appreciating 15.6% Week-On-Week.

Apart from the above, C W Mackie and JKH contributed considerably to the week’s turnover. C W Mackie contribution was approximately Rs.513.5 million and JKH was Rs.367.8 million to the total turnover, with approximately 14.2 million C W Mackie and 2.1 million JKH shares trading during the week. C W Mackie saw its price appreciating moderately by 20.9% to close at Rs.40.50 per share this week, while JKH ended the week at Rs.170.00 per share up by 4.6 % Week-On-Week.

Turnover for the week totaled Rs.6.8 billion, which was a decrease of 27.7% compared to last week. Meanwhile the average daily turnover too decreased by 27.7% to Rs.1.7 billion during the week.

The week’s activity levels were dominated largely by retail investors. Foreign investors remained net sellers for yet another week, standing at a net amount of Rs.0.4 billion. During the week foreign sales amounted to a total of Rs.1.3 billion while total foreign purchases for the week stood at Rs.0.9 billion.

Foreign participation stood at 16.2% of total activity, compared to last week’s participation level of 13.4%. Among the highest traded stocks during the week were Sierra Cables, Kshatriya Holdings, C W Mackie, Piramal Glass and Mullers. Market will remain in green for the next week

From an Economic Perspective

During the week ended Feb 19, the central bank announced the policy rates to be kept stable. This was due to the rising money reserves and the rising YoY inflation. However, Acuity is of the view that there would be a slight rise in the policy rates subsequent to the general elections.

The latest results have shown that the budget deficit has reached 8.5% of the GDP.

Thus, the expanding budget deficit and the inflationary pressure have contributed to the benchmark rates to keep rising.

This is solely due to the exports contracting lesser than the contraction of the imports. However, with the high flow of remittances and the current account at a surplus, still the foreign reserve position remains at a high of approx 5-6 months.

The earnings season has almost come to an end, albeit, some of the major sectors not yet fully announcing the results. When analyzing the companies that have released the quarterly earnings, predominantly the diversified, health, hotels and the plantations have shown improvement QoQ as well as YoY.

Out of the major weighted sectors, the banking and most of the manufacturing sector has yet to release the earnings results.

Thus, with the fully earnings released hopefully by next week acuity should be able to analyze the corporate earnings and comment on the market and respective sector Price to Earnings ratios.

From an overall sense we feel that bourse would be in green during the next week amidst the earnings released and dividends announced by the respective counters.

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.