Both indices decline

Both indices gradually declined over the week to end on a negative note. The ASPI lost 212.42 points (down 4.07%) to close at 5009.67 points while the MPI lost 167.46 (down 3.57%) to close at 4526.13 points.

JKH continued to lead the turnover value for the week with 2.81mn shares being traded (generating a value of Rs 6030 mllion count for 31.34% of the total market turnover. DFCC Bank and Commercial Bank together contributed 04.68% or Rs 262.40 million to the market's total turnover.

Total market turnover value meanwhile amounted to Rs. 1.79 billion representing an increase of 14.80% from last week's total of Rs 1.56 billion. Market Capitalization however, declined significantly, falling 4.06% week-on-week to Rs 1870.33 billion relative to last week's value of Rs 1949.46 billion.

The diversified sector led the turnover value for the week - with significant contributions from JKH and Carsons Cumberbatch - adding 36.36% or an aggregate of Rs 650.01 million to the market.

The Banking and Finance sector followed suit, contributing 29.17% (or Rs 521.38 million) of total turnover value, while the manufacturing sector accounted for Rs 144.71 million or 8.10% of the market's turnover value.

Turnover volume for the week was led by the Banking and Finance sector which accounted for 43.26% (or 41.69 million) of the shares traded over the week.

Following this was the manufacturing sector with 14.76 million shares changing hands to account for 15.31% of the week's turnover volume; the Power and Energy sector was also among the top contributors, accounting for 9.12% (or 8.79 million) of the shares traded over the week.

Foreigners ended the week in a net buying position of Rs 347.82 million, an increase of over 200% compared to last week's net buying position of Rs 100.01mn. Total foreign purchases amounted to Rs 924.99 million as against last week's total of Rs 386.30 million.

In terms of transaction value, the DFCC Bank and Commercial Bank led the foreign purchases for the week, while Renuka Agri Foods Plc and Carsons led foreign sales. In terms of transaction volume too, DFCC Bank and Commercial Bank led the week's foreign purchases, while Dialog and Renuka Agri Foods Plc, led the transaction value for sales.

The top price gainers for the week was led by Sinhaputhra Finance which gained 25.00% to close the week at Rs 85.00 (compared to last week's close

Rs 68.00). Huejay International Investments Plc closed the week at Rs 70.00, up 14.75% over the week, while Dunamis Capital gained 13.92 % to close the week at Rs 9.00.

Finlays Colombo Plc was the top price loser for the week, dropping 28.93% to close the week at Rs 206.10 from the previous week's close of Rs 290.00. Taprobane holdings Ltd was the second highest price loser, closing at LKR 5.30 to represent a decline of 24.29%. Equity One Plc recorded a decline of 22.09% to close the week at Rs 26.10, while Waskaduwa Beach Resort Ltd and The Autodrome Plc declined 21.43% and 21.25%, respectively.

Point of View

Markets continued to lose impetus over the week, with the main index losing over 150 points to end the week just above 5,000 points. Daily average turnover nevertheless - although still paltry at Rs 0.7bn - rose 133% over the week as some institutional buying was evident.

Retailers however, continued to remain sidelined, and winners outweighed losers 68 to 117 by end of trading on Friday.

The Rupee meanwhile depreciated against most major currencies over the week, depreciating 1.25% against the US$ to close at 131.20.

Consequently, foreign inflows continued for the 11th consecutive week, with particular interest in blue chip counters such as HNB, COMB and JKH. Interest rates meanwhile reversed its upward trend this week, with T-Bill yields across all maturities declining (3 month yields fell by 41bps while 6 and 12 month yields fell by 8 bps). Market ssentiment nevertheless failed to revive and we expect similar sluggish sentiments to dominate the week ahead.

We are of the view however that if the rupee and inrest rates were to stabilize near-term, there would be a return of local institutional and high net-worth buying in the market.