Markets revive with gains across all three indices

Markets revived this week despite the holiday-shortened trading week, with gains across all three indices. The ASPI gained 167.31 points (or 3.34%) week-on-week (w-o-w) to close at 5180.15, the MPI increased 175.46 points (or 3.78%) to close at 4811.99 points, while the S & P SL 20 index gained 1.74% (or 49.34 points) to close the week at 2877.88 points.

Aitken Spence contributed to over 50.00% of the week’s total market turnover value, making the stock the highest contributor to this week’s turnover. The counter contributed LKR 2.55bn over the week amid an inter-company transfer of its shares. Also among the highest contributors’ was Colombo Land which accounted for 2.31% or LKR 104.54mn of market turnover value and JKH which contributed LKR 96.22mn or 2.13% over the week. The daily average turnover value for the week amounted to LKR 1.13bn a 48.35% increase from last week’s daily average of 762.45mn. Market Capitalization too increased 3.34% (or LKR 63.98bn) to LKR 1980.81bn from last week’s value of LKR 1916.83bn.

The Diversified sector was the highest contributor to this week’s turnover value, accounting for 63.50% or LKR 2.87bn. Conglomerate Aitken Spence contributed LKR 2.55bn of the sector’s total contribution for the week. The Banking and Finance sector made a contribution of LKR 478.14mn or 10.56% to the market’s total turnover value while the Manufacturing sector accounted for 4.86% (or LKR 219.78mn).

The Diversified sector dominated the weekly turnover volume too, accounting for 29.92% of total turnover volume as 55.30mn shares changed hands over the week. The Banking and Finance sector contributed 16.80% or 31.05mn shares, while 24.46mn shares (13.24%) changed hands in the Hotels and Travel sector.

Multi-Finance topped the price gainers’ list, rising 59.45% w-o-w to close at LKR 34.60 relative to last week’s close of LKR 21.70. Entrust Securities closed the week at LKR 25.30, to represent a w-o-w gain of 42.94% while Taprobane Holdings Ltd. gained 42.11% to close the week at LKR 5.40. Ceylon and Foreign Trades PLC and Bimputh Finance were also amongst the top price gainers for the week, gaining 38.46% and 30.05%, respectively.

Orient Finance led the price losers’ list this week, as it declined 8.99% over the week to close at LKR 17.20 relative to last week’s close of LKR 18.90. Property Development PLC declined 8.46% to close at LKR 41.10 while Maskeliya Plantations PLC lost 7.91% over the week to close at LKR 12.80.

The bourse recorded net foreign inflows (LKR 87.13 mn) yet again this week, albeit a 93.55% decline from last week’s net inflow of LKR 1.35bn). Total foreign purchases amounted to LKR 0.23bn compared to last week’s value of LKR 1.84bn (down 87.43%) while total foreign sales amounted to LKR 144.57mn, down 70.61% from LKR 491.88mn last week.

Central Finance and Piramal Glass led foreign purchases in terms of volume, while Malwatte Valley Plantations and Environment Resources led the foreign sales.

In terms of value too, Central Finance and JKH led foreign purchases, while Malwatte Valleys Plantations and Environment Resources led foreign sales.

Point of View

Retail investors staged a strong comeback this week, helping push the main Index over the key technical support level of 5100 after a 3-month hiatus. Turnover levels too hit a 21/2 month high of LKR 3.1bn mid-week, although this was primarily due to an inter-company share transfer of Aitken Spence shares.

Average daily turnover levels (LKR 1.1bn) were consequently higher this week, up 22% from the Y-T-D daily average of LKR 0.9bn. Assuming retail-sentiment continues to drive indices up further, some profit-taking can be expected in the week ahead.

Six month earnings of the approximately 76% corporates that have reported thus far, have been mixed with sectors such as Financial Services, Diversified, Beverage, Food & Tobacco, Manufacturing, Motors, Plantations, Trading, Health Services, Construction, and Services indicating Y-o-Y growth.

Overall market earnings however, show a marginal decline, down 0.1% Y-o-Y to LKR 79.3bn.

The market PER meanwhile has continued to decline, ending August at 10.6x1, relative to 13.25x1 in Dec 2011 and 17.75x1 in December 2010.