Market Report

Markets records gains

Reversed the downward momentum:

Markets reversed the downward momentum witnessed over the past few weeks with all three indices recording W-o-W gains. The ASPI gained 0.67% (36.08 points) over the week to close at 5387.33 points.

The MPI increased 30.42 points (or 0.62%) to close at 4899.25 points, while the S&P SL 20 index gained 0.33% (or 9.83 points) to close the week at 2951.85 points. Aviva NDB Insurance was the highest contributor to the week’s total turnover value, recording a value of LKR 526.04mn to represent 19.55% of total market turnover.

JKH contributed 15.25% to total market turnover as it contributed LKR 410.48mn while Distilleries Company accounted for 7.12% of market turnover with a contribution of LKR 191.53mn.

Total turnover value for the week amounted to LKR 2.69bn compared to last week’s four day cumulative of LKR 2.08bn. The daily average turnover value for the week meanwhile amounted to LKR 538.18mn, up 3.61% compared to last week’s daily turnover value of LKR 519.41mn Market Capitalization meanwhile increased 0.67% (or LKR 13.87bn) to LKR 2068.78bn from last week’s value of LKR 2054.91bn.

On a sectoral level, the Banking and Finance sector was the highest contributor to the week’s turnover value, accounting for 38.13% (or LKR 1.03bn) of the market with Aviva NDB accounting for 51.3% of this value.

The Diversified sector followed suit with a contribution of 18.89% or LKR 508.42mn while the Investment Trust sector accounted for LKR 409.87mn (or 15.23%) of the market’s total turnover value.

The Investment Trust sector accounted for over half of the week’s total turnover volume with 103.24mn shares (or 61.04%) being traded over the week. The Banking and Finance sector accounted for 11.67% of total turnover volume as 19.73mn shares changed hands.

Meanwhile, a total of 9.96mn shares traded within the Diversified sector, helping the sector account for 5.89% of total market volume.

The highest price gainer for the week was Metropolitan Resource Holding which gained 20.00% to close the week at LKR 21.00 compared to last week’s close of LKR 17.50. Mercantile Shipping Company followed suit, gaining 17.86% (W-o-W) to close at LKR 165.00 while Madulsima Plantations closed at LKR 16.40, up 17.14% W-o-W. Also amongst the price gainers were Peoples’ Leasing and Hunas Falls with gains of 15.65% and 15.38%, respectively. Beruwala Walk Inn was the highest price loser for the week, declinind 26.13% (W-o-W) to LKR 57.40 relative to last week’s close of LKR 77.70.

Property Development decline

Property Development declined 21.78% to close at LKR 41.30 while Capital Alliance Finance dropped 17.39% over the week to close at LKR 19.00.

Foreign investors closed the week in a net buying position of LKR 0.98bn relative to a last week’s net buying position of LKR 0.92bn, as average daily net inflows amounted to LKR 0.20bn compared to last week’s 4-day daily average net intflow of LKR 0.23bn.

Average daily foreign purchases increased 16.91% (W-o-W) to LKR 358.28mn (relative to last week’s average of LKR 306.45mn) while average daily foreign sales increased 110.38% (W-o-W) to LKR 163.19mn (from last week’s average of LKR 77.57mn). In terms of volume, JKH and Aviva NDB led foreign purchases, while foreign sales were led by People’s Leasing and Trade Finance. In terms of value meanwhile, Aviva NDB and JKH led foreign purchases, while National Development Bank and Aitken Spence led foreign sales.

Subdued sentiment continued to pre-dominate markets despite the main ASPI recording W-o-W gains after a lapse of nearly a month.

Markets rallied on Thursday (+63 points) primarily due to interest in illiquid stocks, but this momentum failed to be sustained through Friday. Mid-week highs in volume (LKR 0.9bn) were driven primarily by large block trades on selected stocks and the daily average turnover level continued to hover around LKR 0.5bn, 44.4% below the Y-T-D average of LKR 0.9bn.

Foreign buying nevertheless remained persistent with net inflows of LKR 701.92mn on Wednesday helping push the Y-T-D net foreign position to LKR 36.5bn. With the onset of the holiday season, markets are likely to remain subdued in the week ahead.

Point of View

Subdued sentiment continued to pre-dominate markets despite the main ASPI recording W-o-W gains after a lapse of nearly a month. Markets rallied on Thursday (+63 points) primarily due to interest in illiquid stocks, but this momentum failed to be sustained through Friday.

Mid-week highs in volume (LKR 0.9bn) were driven primarily by large block trades on selected stocks and the daily average turnover level continued to hover around LKR 0.5bn, 44.4% below the Y-T-D average of LKR 0.9bn.

Foreign buying

Foreign buying nevertheless remained persistent with net inflows of LKR 701.92mn on Wednesday helping push the Y-T-D net foreign position to LKR 36.5bn.

With the onset of the holiday season, markets are likely to remain subdued in the week ahead. The aggregate trade deficit for the Jan-Oct period declined 1.0% Y-o-Y, indicating the 2nd consecutive month of cumulative declines.

The trade deficit for October meanwhile declined 6.7% Y-o-Y, with a 10.1% (Y-o-Y) decline in imports helping partially offset a 13.4% (Y-o-Y) decline in exports. Inflows into the current and capital account meanwhile continued to cushion the trade deficit’s impact on the overall B-o-P, with inflows into the services account of the current account remaining strong.

Earnings from tourism rose 22.1% Y-o-Y between Jan-Oct helped by a 16.0% increase in tourist arrivals while worker remittances grew 17.6% Y-o-Y to USD 4.9bn.

Capital inflows too have remained robust helped by steady inflows to the CSE and higher Government and commercial bank borrowings. Consequently, the country’s gross official reserves by end-October were the equivalent of 4.0 months of imports, marginally lower than the September figure of 4.3 months.