HNB, highest contributor to week's turnover value

Markets remained largely flat over the week, as the ASPI dropped 20.41 points to close at 5830.26 points while the S&P SL 20 index gained a marginal 3.00 points to close the week at 3274.25 points.

The ASPI declined 0.35% W-o-W while the S&P SL 20 Index increased 0.09% W-o-w. HNB continued to hold last week's position as the highest contributor to the week's turnover value, accounting for 17.19% of total market turnover with a contribution of LKR 528.35mn.

Sampath Bank was the second highest contributor with a value of LKR 353.65mn, representing 11.50% of the week's total market turnover while JKH accounted for 11.02% (or LKR 338.66mn).

The daily average turnover for the week totalled LKR 614.82mn, a decrease of 51.81% compared to last week's daily average of LKR 1.28bn. Total turnover value for the week amounted to LKR 3.07bn, down from last week's four-day total of LKR 5.10bn.

Market Capitalization too declined 0.35% (or LKR 7.82bn) to LKR 2239.77bn from last week's market capitalization of LKR 2247.59bn.

The Banking and Finance sector continued to dominate weekly turnover value, contributing LKR 1.47bn (or 47.84%) amid interest in counters such as HNB and Sampath Bank, each of which contributed 36% and 24% respectively to the sector.

The Diversified sector too made a noteworthy contribution of LKR 678.63mn (or 22.08%) to the total market turnover, helped mainly by JKH which contributed 49.9% to the sector's turnover.

The Manufacturing sector meanwhile, accounted for 9.11% (LKR 280.01mn) of total turnover value.

The Diversified sector led the turnover volume, accounting for 38.55% (or 59.72mn shares) of total volume traded.

The Banking & Finance sector meanwhile contributed 22.23% as 34.43mn shares changed hands, while the Manufacturing sector contributed 16.06% (or 24.87mn shares) over the week.

The highest price gainer for the week was Metropolitan Resource Holdings which gained 21.74% W-o-W to close the week at LKR 25.20 compared to last week's close of LKR 20.70.

Serendib Land followed suit, gaining 18.33% W-o-W to close at LKR 1775.00 while Hayleys Fibre closed at LKR 33.80, up 12.67% W-o-W. Also amongst the top price gainers were Commercial Leasing & Finance Ltd and Orient Finance each of which gained of 10.53% and 9.86%, respectively.

Shalimar led the price losers list this week, closing at LKR 804.00 relative to last week's close of LKR 1000.00 (19.60% decline W-o-W). Ceylon Printers declined 17.42% W-o-W to close at LKR 1280.00 while Abans Finance dropped 16.22% over the week to close at LKR 31.00.

Foreign investor activity recorded net inflows of LKR 0.15bn relative to net outflows of LKR 0.23bn last week, as daily average net inflows amounted to LKR 0.03bn compared to last week's daily average net outflow of LKR 0.06bn. Daily average foreign purchases amounted to LKR 0.22bn relative to LKR 0.76bn recorded last week (71.17% W-o-W decline) while daily average foreign sales amounted to LKR 0.19bn compared to LKR 0.82bn recorded last week (76.86% W-o-W decline).

In terms of volume, Dialog and JKH led foreign purchases, while Union Bank and HNB led foreign sales. In terms of value meanwhile, JKH and Sampath Bank led foreign purchases while HNB and Union Bank led foreign sales.

Point of View

Markets were subdued this week hovering between a narrow range of 5825-5851 amid low investor participation. Despite a marginal gain of 7.69 points on Friday, the main ASPI dropped approximately 21 points over the week. Volumes too lost some momentum, averaging LKR 0.6bn relative to the Y-T-D average of LKR 1.1bn and the 2012 daily average of LKR 0.9bn.

Foreign flows however rebounded to a net inflow position after a three week hiatus as significant buying interest in blue-chips and banking counters remained steady.

Markets in the week ahead are likely to remain broadly unchanged. Corporate earnings of the 128 companies (46% of total market) that have reported so far have been broadly positive, with approximately half recording Y-o-Y gains in December quarter earnings.

The Central Bank (CB) meanwhile held steady its policy rates for the 2nd consecutive month since its downward revision in December. The CB added that easing credit conditions coupled with the narrowing trade deficit marks its current monetary policy stance as appropriate.

Broad money growth decelerated to 17.6% Y-o-Y in December from a peak of 22.9% in April, while credit growth to private sector declined to 17.6% Y-o-Y by end-2012 (34.5% in 2011). The 2012 trade balance meanwhile declined to USD 9.31bn relative to USD 9.71bn in 2011. Despite pressure on export earnings, Capital and financial account inflows have remained strong, helping push gross.