Acuity Stockbrokers weekly market review:

Market gathers momentum

Markets closed the week on a positive note with the ASPI gaining 281.13 points to close at 5566.30 points (representing a 5.32% gain); the MPI meanwhile gained 253.35 points to close at 4802.78 points (representing a 5.57% gain).

The daily average turnover value for the week amounted to LKR 1.71bn, down 1.00% from last week’s value of LKR 1.73bn. Aggregate turnover value was dominated by LB Finance Plc, Hayleys Plc and Aitken Spence Plc which contributed 40.79% cumulatively. Market capitalization meanwhile rose a significant 5.32% during the week to close at Rs 2040.84 billion.

The Diversified sector made the highest contribution to the total market turnover value for the week, accounting for 33.95% or Rs 2.33 billion. The Banking and Finance sector accounted for 28.28% or Rs 1.94 billion and the Beverage Food and Tobacco sector accounted for 8.77% or Rs 600.38 million of total market turnover for the week.

Weekly turnover volume was dominated by the Banking and Finance sector which accounted for 24.08% of the total market turnover volume or (55.89mn shares).

The Manufacturing sector contributed 22.93% as 55.24 million shares changed hands. The Diversified sector meanwhile accounted for 14.45% or 33.54 million of the shares traded over the week.

CDIC was the top price gainer for the week, increasing 55.30% to close at Rs 310.60 compared to last week’s close price of Rs 200. Central Investments and Finance Plc gained 49.15% to close the week at Rs 8.80 while Udapussellewa Plantations Plc closed at Rs 28.80 to represent a week-on-week gain of 47.69%. J.L Morison recorded the steepest price decline of the week, closing at Rs 115 as against last week’s closing price of Rs 148.90 (-22.77%). Harischandra Mills Plc declined by 22.64% over the week to close at Rs 2,475 while PC Pharma closed down 20.00% at Rs 40.

Active foreign participation continued on the bourse with foreigners recording a net buying position of Rs 1.18 billion as against last week’s net buying position of Rs 1.17 billion.

Average daily foreign sales for the week decreased by 87.40% to Rs 40.61 million from Rs 322.28 million recorded last week.

The daily average net foreign purchases meanwhile decreased 39.72% to Rs 334.77mn relative to last week’s daily average of Rs 555.36mn.

Blue Diamonds [NV] continued to lead the volume list this week, accounting for 13.10% or 30.40 million shares of the week’s aggregate share volume. PC House contributed 4.56% (or 10.59 million shares) to the market’s total share volume.

Point of View

Markets gathered momentum over the week with the main index gaining over 250 points and turnover reaching a Y-T-D high of Rs 3.7 billion. Foreign investors remained net buyers for the second consecutive week, pushing the market’s Y-T-D net inflow to Rs 2.81bn (relative to a net outflow of 7.09 billion for the same period a year ago).

Positive sentiment and robust market fundamentals boosted overall markets, although investors adapting to the new trading system dampened Friday’s volumes. We expect positive momentum to continue in the week ahead.

Provisional figures for external sector performance in 2011 indicate a widening trade deficit, with the balance of trade for the period recording a Y-o-Y growth of 99.6%.

Inflows however, have remained robust, with FDI inflows gaining a significant 107.4% Y-o-Y; other inflows have also recorded Y-o-Y growth with worker remittances up 25.0%, Tourism earnings up 44.2% and Government inflows up 15.6%.