Weekly Market Review

Indices record week-on-week gains

Markets showed signs of recovery over the week with all three indices recording a week-on-week gains. The main ASPI gained 1.05% (61.92 points) to close the week at 5971.99 points. The MPI increased by 111.64 points (or 2.02%) while the S&P SL 20 Index gained 1.98% (62.82 points) to close the week at 5645.95 and 3240.98 points, respectively.

Aitken Spence was the highest contributor to this week’s turnover value accounting for 30.37% or LKR 3.05bn; Melstacorp Ltd’s acquisition of 66.42mn shares in Aitken Spence from Distilleries Company of Sri Lanka Plc helped Spence lead this week’s overall turnover value. Large crossings of Asiri Hospitals meanwhile helped the counter contribute LKR 1.17bn or 11.64% to the market’s overall turnover value. Commercial Bank too was among the top contributors to turnover as it contributed LKR 828.69mn (8.26%) to total market turnover value. The week’s total turnover amounted to LKR 10.04bn, an increase of 39.51% from last week’s value of LKR 7.19bn. The daily average turnover value for the week amounted to LKR 2.01bn relative to last week’s LKR 1.44bn. Market Capitalization too gained 1.05% (or LKR 23.83bn) to LKR 2284.88bn, relative to last week’s market capitalization of LKR 2261.05bn.

The Diversified sector, aided mostly by Aitken Spence (with a value of LKR 3.05bn) was the highest contributor to the week’s turnover value, contributing LKR 4.11bn or 40.99% to the market. The Banking and Finance sector contributed LKR 2.50bn or 24.86% over the week while the Health Care sector – helped primarily by Asiri Hospitals - accounted for 13.05% or LKR 1.31bn.

Turnover volume for the week was dominated by the Health Care sector which - helped by Asiri Hospitals with 102.25mn shares - accounted for 32.25% of volume (or 107.55mn shares). The Banking and Finance sector meanwhile accounted for 18.68% (62.30mn shares) of total volume traded. Meanwhile, 49.00mn shares changed hands in the Diversified sector helped it account for 14.69% of total market turnover volume.

Sathosa Motors was the highest price gainer for the week, closing at LKR 247.90 relative to last week’s closing price of LKR 178.20, to reflect a week-on-week gain of 39.11%. Asia Siyaka meanwhile gained 28.57% to close the week at LKR 9.00 while Lake House Printers closed at LKR 127.90, up 27.90% over the week.

The top price losers for the week was led by Ceylon Printers which lost 32.97% to close at LKR 2010.10 compared to last week’s close of LKR 2998.90. G S Finance dropped 20.25% to close the week at LKR 927.70 while Good Hope closed down 19.33% at LKR 1210.00.

Foreign investors closed the week as net buyers as net inflows amounted to LKR 1.42bn relative to LKR 0.60bn last week. Daily average net inflows amounted to LKR 0.28bn relative to LKR 0.12bn last week to represent a 135.86% W-o-W gain. Total foreign purchases increased 63.91% to LKR 2.47bn from LKR 1.51bn last week, while total foreign sales amounted to LKR 1.05bn relative to LKR 0.90bn last week representing a 16.10% W-o-W gain.

In terms of volume, Asiri Hospitals Holdings and Dialog Axiata led foreign purchases, while Commercial Bank and Nation Lanka Finance led the foreign sales. In terms of value however, Asiri Hospital Holdings and JKH led foreign purchases, while Commercial Bank and Aitken Spence led foreign sales.

Point of View

Markets regained traction this week, with the main Index gaining a cumulative 61.9 points to hit an 81/2 month high. Turnover levels too touched a 13-week high (LKR 4.3bn) mid-week as large block trades on selected blue-chip counters helped sustain volumes. Cumulative turnover for the week was LKR 10.0bn, helping push the year-to-date daily average to LKR 1.0bn. Net foreign inflows to the market meanwhile increased 135.9% W-o-W to LKR 1.4bn aided mainly by strategic foreign institutional buying in Asiri Hospital Holdings. We expect renewed retail interest in the week ahead as month-end selling pressure begins to ease.

Point-to-point inflation declined for the 2nd consecutive month in September with the CCPI recording 9.1% (Y-o-Y) relative to 9.5% (Y-o-Y) in August and 9.8% (Y-o-Y) in July. The decline comes amid a significant 0.5% decline in food inflation (down to 8.9% Y-o-Y in September relative to 9.4% Y-o-Y in August) and a notable 0.2% decline in non-food inflation (9.3% Y-o-Y in September relative to 9.5% Y-o-Y in August). Stock-related inflows meanwhile, pushed the LKR up significantly, helping the LKR appreciate 1.57% against the USD as it traded below the 130 mark for the first time in four months.

At the end of trading on Friday, the USD was quoted as 129.60 LKR/USD. Central Bank officials however, revised down its original 2012 GDP growth estimate, forecasting 6.8% growth relative to 7.2% earlier. The downgrade comes amid the World Trade Organization cutting its 2012 global trade growth forecast (down to 2.5% from 3.7% previously) citing the Eurozone debt crisis and weak growth in the US and China.