Retail investors to dominate market

The ASPI gained marginally for the second consecutive week closing at 6,990.33 points; the more liquid MPI index however, closed on a negative note at 6,286.93 points. The ASPI increased by 0.57% while the MPI decreased by 0.16%.

The weekly turnover value gained by 2.24% to Rs 19.73 billion, amounting to a daily average value of Rs 3.95 billion compared to last week’s value of 19.30 billion. Turnover value for the week was dominated by JKH, Blue Diamond (NV) and Browns Investments Ltd, accounting for 33.36% of the total turnover value. The number of shares traded increased significantly by 130.51%, averaging 317.82 million, as against 137.88 million shares traded last week.

The Diversified sector led the turnover in value for the week, accounting for 31.05%, amounting to Rs 6.13 billion. The second highest contributor was the Manufacturing sector, with 15.33% or Rs 3.02 billion. The third highest contributor was the Banking and Finance sector, accounting for 14.30%, amounting to 2.82 billion.

Volume of turnover for the week was dominated by the Banking and Finance Sector, accounting for 40.48% of total market volume, with 643.24 million shares changing hands, followed by the Manufacturing sector, which represented 22.75% or 361.55 million shares. Third highest contributor was the Diversified sector, with 230.98 million shares being traded, or 14.54% of turnover volume. Market capitalization recorded a marginal gain of 0.6% to close at Rs 2507.45 billion, as against last week’s close of Rs 2492.18 billion.

Blue Diamonds (NV) was the major price gainer for the week with a 45.95% increase to close at Rs 5.40. The second highest gainer was Ceylon Tea Brokers, closing at Rs 7.7, compared to last week’s close of Rs 5.40, representing a 42.59% gain. Radiant Gems was the third highest gaining 42.04%, to close at Rs 114.20.

The list of major price losers was dominated by Miramar Beach Hotel, losing 14.43%, to close at Rs 263.9. Singalanka followed suit to, closing at Rs 32.70, declining 12.32%. The third major loser was Selising, losing 12.00%, to close at Rs 1100.00. Mercantile Shipping Company Plc and Metropolitan Resource Holdings Plc were also major price losers for the week. Foreigners remained net sellers, with a total net selling position of Rs 4.44 billion, relative to last week’s position of Rs 37.77 million. Foreign selling amounted to Rs 5.7 billion, mainly on account of Arisag selling its stake in JKH to local institutions.

Blue Diamonds (NV) topped the volume list recording 264.08 million shares changing hands representing 16.62% of the aggregate share volume. SMB Leasing contributed 11.13% of aggregate share volume,with 176.83 million shares changing hands.

Point of view

Market momentum based on retail-activity continued over the week with strategic investments by Distilleries, Asian Alliance and East West Properties dominating market activity.

Institutional investors are likely to remain on the sidelines in the week ahead while retail-investors continue to dominate markets. We continue to see value in the market given the strong earnings potential of corporates and believe that an accumulated portfolio of selected stocks will generate value in the medium term.

The IMF’s 2011 growth forecast of 7.5% and satisfaction regarding the macroeconomic conditions and fiscal performance augurs well for the medium term outlook. However, an increased level of investment both - foreign and local - is imperative to maintain the growth momentum.