Weekly Equity Review: 14th Sep 2011
Posted on the September 15th, 2011 under Market Reports by S C Securities 
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The Week in Equity…
The Colombo bourse ended the period under review on a negative note with both the market indices, the All Share Price Index (ASPI) & the Milanka Price index ending 1.46% (102.25 points) & 1.58% (99.83 points) lower W/W respectively. The ASPI closed on Wednesday at 6,895.61 points whilst the MPI ended at 6,227.65 points. During the first two days of the period under review the indices moved sideways, losing marginally. However since Monday the market indices have, particularly the ASPI has lost a notable 1.35% (94.72 points). Speculative trading continued throughout the five day period with institutional interest primarily seen in high caps.
John Keells Holdings (JKH) was among the top turnover generators of the week with more than 3.6Mn shares transacting at a high of LKR.220.00 & a low of LKR.213.00. A total of three off the floor trades took place at prices between LKR.215.00 & LKR.219.10 which saw a little more than 2.8Mn shares changing hands. The counter lost ground at during the early part of the period under review but recovered towards the end of the period to close at LKR.218.80, up by a marginal 0.14% (LKR.0.30). Institutional interest was evident in JKH during the period in concern.
Tess agro was the stock of the week gaining a notable 61.11% (LKR.2.20) W/W. The counter which started at LKR.3.60 on the first day of the period under review appreciated continuously during five days to end at LKR.5.80. Close to 122Mn shares traded during the week, at a high of LKR.5.80 & a low of LKR.3.60, generating a turnover of LKR.610.67Mn.
PC House (PCH) contributed a turnover of LKR.733.30Mn to the week’s turnover supported by a crossing of 21.1Mn shares at a price of LKR.22.00. The turnover generated from the crossing accounted for over 66% of the week’ s turnover of PCH. The counter picked up during the first two days of the period in concern hitting a high of LKR.20.60, but lost ground during the subsequent days to end 7.73% (LKR.1.50) lower W/W. PCH closed at LKR.17.90 on Wednesday.
United Motors (UML) reached a high of LKR.189.00 on Monday before shedding ground towards the end of the period in concern to end at LKR.163.40. The counter gained 9.85% (LKR.14.70) W/W. The share traded actively on Friday & Monday.
Blue Diamonds (BLUE) Voting rose 10.68% (LKR.1.10) W/W. High retail participation was seen on the counter along with high net worth interest to some extent. BLUE traded at a high of LKR.12.40 before ending at LKR.11.40 for the period under review. A total of 39.03Mn shares transacted during the period. Moreover the non voting share (BLUE.X) too attracted retailers but did record a gain of only 4.08% (LKR.0.20) W/W. The counter ended at LKR.5.10 on Wednesday.
Turnover
Market turnover levels remained healthy during the period in concern with a average daily market turnover of LKR.2.65Bn. Total turnover for the week was LKR.13.25Bn, with almost equal contribution from each trading day with the exception of Wednesday, where the activity levels narrowed down, recording a turnover of LKR.1.63Bn, well below the year to date daily average. The top contributors to the week’s turnover were, John Keells Holdings, PC House, Tess Agro, Lanka Milk Foods (through crossings that took place on Tuesday), Blue Diamonds Jewelry Voting & Non Voting.
Foreign participation for the week Foreigners continued to be in a selling mood during this week as well with the JKH trades contributing principally for the augmentation in foreign selling. The buying parties were identified as Asian Alliance Insurance (AAIC) & another local institution. Foreigners ended the period under review as net sellers with foreign sales worth of LKR.2.05Bn against foreign buying amounting to LKR.0.97Bn, resulting in a net foreign outflow of LKR.1.08Bn.
Forward Outlook
“The market, as stated in our previous issues needs more foreign investments. Net foreign buying needs to improve along with solid buying in blue chip counters. The market could look bearish compared to last week with a limited upward movement in the indices.
However the growth in indices & healthy activity levels will be sustainable only if confidence & vitality is provided by way of foreign investments, governmental & private institutional buying.
We believe the market outlook remains positive taking into account the low interest rate regime & the prospective healthy growth in earnings of corporates. We advice our clients to pick stocks that are fundamentally sound & attractively priced.
We believe Sampath Bank, Royal Ceramics, Lanka Tiles, Tokyo Cement, Commercial Bank, Hemas Holdings, Sierra Cables, Ceylon Glass, Colombo Dockyard, Distilleries & Aitken Spence Hotel Holdings are some of the stocks that would provide investors with medium to long term returns as they are fundamentally sound & have growth potential.
However we advice our clients to look for bargains by taking advantage of the dull sentiment.
