MARKETS

Colombo bourse changing course?

Point of view

This week’s trading at the Colombo bourse ended on a negative note with the ASPI losing 4.6 percent week on week.

The index has lost 6.4 percent from its peak of 7,811.82 on February 14, 2011, however, continues to indicate a sound year to date return of 10.2 percent.

We expect the current momentum dominated by retail investors to continue with profit taking persisting into the week ahead. The current trend gives bargain hunters opportunity to consolidate positions on fundamentally strong stocks with strong earnings potential which will reflect in favourable Price to Earnings Ratios.

Market was in correction mode throughout the week with both indices declining further as ASPI was down by 351.7 points to end at 7313.02 indicating a slippage of 4.59 percent over the previous week. MPI dropped by nearly 3 percent losing 207.26 points to close at 6822.16. Aggregate weekly turnover was recorded at Rs 10.05 billion with daily average of Rs 2 billion. Turnover levels were low when compared to earlier week’s statistics of Rs 10.68 billion (excluding Rs 4.6 billion relating to Lanka Hospital deal) giving a daily average of Rs 2.67 billion.

Manufacturing, Diversified and Banking sector counters witnessed investor interest with Manufacturing sector contributing 17.04 percent to the total weekly turnover with input of Rs 1.7 billion followed by Diversified amounting to 16.62 percent and Banking Finance and Insurance at 16.05 percent. In value terms, Diversified pooled in Rs 1.67 billion and Banking sector Rs 1.61 billion. Volumewise Healthcare segment led market activity amounting to 21.83 percent followed closely by Manufacturing at 21.81 percent while Banking sector amounted to 18.43 percent.

The counters that witnessed investor interest in the Manufacturing sector were Royal Ceramics, Piramal Glass and Laugfs Gas while JKH supported the Diversified segment and Banking was strengthened by NDB and Ceylinco Insurance. Market Capitalization was noted at Rs 2.44 trillion at the close of the week.

Lankem Development was the top price gainer for the week with a rise of 26.28 percent to close at Rs 61.50. The company announced its plans to acquire a 61.88 percent stake of Agarapatana Plantations Ltd. for a consideration of Rs 1.18 billion. The other counters to lead the price rally were First Capital and On’ally reflecting price increases of 12.38 percent and 11.25 percent respectively. The scrips closed at Rs 23.60 and Rs 70.20 respectively.

Among the major losers was Browns Beach declining by 67.42 percent over the previous week to close at Rs 21.50.

Share prices of LB Finance and Nation Lanka Finance noted a fall by 52.41 percent and 51.30 percent.

LB Finance was down from Rs 295.20 to Rs 140.50 while Nation Lanka Finance dropped to Rs 11.20 from the previous week’s level of Rs 23.00. The other losers were Guardian Capital, CDIC and Union Chemicals.

Foreign activity was thin with net outflow of Rs 649.76 million during the week. The aggregate weekly foreign inflow was noted at Rs 965 million vis a vis outflow of Rs 1.6 billion.

Healthcare segment continued to dominate the weekly volume chart with Nawaloka reporting 66.7 million shares as a high net worth individual raised his stake in the hospital.

Piramal Glass was another counter with high volumes at 42.88 million shares.

Richard Peiris, PC House, and Laugfs Gas were some other stocks with high volumes during the week.