MARKET REPORT

Market continues uptrend

Market Review:

The market continued last week’s uptrend with the ASPI gaining 1.69% (or 108.15 points) to close the week at 6488.85 points. The S&P SL 20 Index meanwhile, gained 76.78 points (or 2.14%) to end the holiday-shortened trading week at 3666.04 points.

Significant foreign interest in Commercial Bank resulted in the counter dominating this week’s total turnover value. The stock’s contribution of LKR 1.14bn helped it account for 23.84% of the toal market turnover. Conglomerate JKH meanwhile, accounted for 13.10% (or LKR 628.76mn) of total market turnover value, while Distilleries - which contributed LKR 242.73mn (or 5.06%) - was the third highest contributor to total market turnover. Total market turnover for the 4-day trading week amounted to LKR 4.80bn, a decline of 21.96% compared to last week’s value of LKR 6.15bn. The daily average turnover value for the week consequently amounted to LKR 1.20bn, a 2.45% decline from last week’s daily average of LKR 1.23bn. Market Capitalization however, increased 1.70% (or LKR 41.55bn) to LKR 2491.73bn from last week’s value of LKR 2450.18bn.

On a sectoral level, the Banking and Finance sector was the highest contributor to the week’s total market turnover value, accounting for 36.65% (or LKR 1.76bn) of the market. The sector was helped primarily by Commercial Bank, which contributed 65.05% to sector turnover. The Diversified sector trailed behind with a contribution of LKR 894.47mn to account for 18.65% of total market turnover value. Sector turnover was driven mainly by JKH which contributed 70.29% (or LKR 628.76mn) over the week. The Beverage, Food and Tobacco sector meanwhile, was the third largest contributor to the week’s turnover value, contributing 11.56% (LKR 554.71mn), as Distilleriesaccounted for 43.76% (or LKR 242.73mn) of total sector turnover.

In terms of share volume too the Banking & Finance sector was the largest contributor this week, accounting for 31.16% (or 38.70mn shares) of the market’s total trades for the week. The Diversified sector contributed 13.87% of the total traded volume as 17.23mn shares were exchanged while 16.84mn shares in the Land & Property sector changed hands, accounting for 13.56% of the week’s turnover volume.

Despite just 14 of its shares trading over the week, Serendib Land was the highest price gainer for the week, gaining 41.67% W-o-W to close at LKR 1,700, compared to last week’s close of LKR 1,200.00. Convenience Food gained 22.45% W-o-W to close at LKR 244.90 while Chevron gained 16.80% W-o-W to close at LKR 300.30. Lion Brewery and Ceylon Beverage were also amongst the top gainers for the week, gaining 15.14% W-o-W and 13.26% W-o-W, respectively.

The highest price loser for the week was SMB Leasing (NV) which declined 20.00% W-o-W to close at LKR 0.40, relative to last week’s close LKR 0.50. Ceylon Printers declined 17.14% W-o-W to close the week at LKR 1,450.00, while PCH Holdings closed at LKR 4.10, representing a 10.87% decline over the week.

Net foreign inflows to the bourse amounted to LKR 1.90bn, a 19.96% increase from last week’s value of LKR 1.59bn; consequently daily average net inflows increased 49.95% W-o-W to LKR 0.48bn relative to LKR 0.32bn recorded last week. Over the week, daily average foreign purchases declined 1.62% W-o-W to LKR 0.62bn relative to LKR 0.63bn recorded last week, while daily average foreign sales declined 53.70% W-o-W to LKR 0.15bn from last week’s average of LKR 0.31bn. In terms of volume, Commercial Bank and United Motors led foreign purchases, while Panasia Power and Environmental Resources and Investments led foreign sales. In terms of transaction value, Commercial Bank and Cargills led foreign purchases, while Environmental Resources and Investments and NTB led foreign sales.

Point of View

Foreign activity pre-dominated this week with Y-T-D net foreign inflows surpassing LKR 12.0bn. Significant buying interest in JKH and Commercial Bank boosted foreign inflows to a mid-week high of LKR 1.52bn, with turnover value hitting LKR 2.19bn on Tuesday. Daily average turnover value – albeit declining week-on-week – amounted to LKR 1.20bn, driven by active retail participation along with a large number block trades.

Indices in turn, mirrored this positivism, gaining 108.15 points W-o-W, to extend its Y-T-D return to 14% (cf. a -7.0% decline in FY 2012). Similar buoyant sentiment is likely to continue in the week ahead. Interest rates, which fell sharply last week following the Central Bank’s policy rate cut, were mixed this week, with the benchmark 6M –Treasury yield falling 1bps to 9.90% and the weighted average one-week Prime Lending Rate declining 4bps to 13.08%. Yields across the 3M and 1Y Treasuries however, did not extend last week’s decline and the 3M treasury remained flat while the yield on the 364-Treasury gained 2bps.

Inter-bank call money rates meanwhile, remained flat at 9.00% as money market liquidity which declined for the first time in 41/2 months last week reverted back again to a surplus position of LKR4.2bn. The LKR meanwhile depreciated once again this week, declining 0.17% against the USD to close the week at an average of 126.35 per USD.