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Asian Tribune is published by E-LANKA MEDIA(PVT)Ltd. Vol. 20 No. 110

Rebound short lived as share market plunges Sluggish sentiment to continue

By Quintus Perera – Asian Tribune

Colombo, 02 April, ( The HNB Stockbrokers in their weekly review indicated that the share market took a downward trend this week, in contrast to last week, where the market somewhat rebounded. The major fall in the market this week came on Monday, as a reaction to the LTTE attack on an air force base camp at Katunayake due to this factor the market fell by 38.9 points.

Apart from the market fall on Monday, the balance days of the week showed only a moderate dip averaging around 9 points a day. Thus the market, seem to be consolidating around current levels. The All Share Price Index (ASPI) fell by 72.9 points this week, closing at 2789.8 points, while the Millanka Price Index (MPI) saw a steeper fall of 97.4 points closing the week at 3837.6 points. The lesser decline in the ASPI could be attributed to gains in share price witnessed in high market capitalization stock Carsons, which does not come under MPI.

Low liquidity counters seemed to take the forefront in turnover contributions this week, while Blue chip counters took the back seat making modest contributions towards turnover. Millers was the highest contributing stock towards weekly turnover this week, contributing Rs.670 million. Approximately one million of Millers shares traded on Friday, which led to the turnover highlighted above. The share price slipped by 8.8 percent this week closing at Rs.684.25 per share, while for the week the share traded between a range of Rs.685 per share and Rs.669 per share.

NDB showed renewed interest this week, with 1.36 million of its shares trading on Friday. Friday’s trade of shares saw NDB share prices rising, touching a high of Rs.210 per share. The appreciation in share price witnessed, amounted to 3.6 percent comparing Week on Week (WoW), while the share closed at Rs.199 per share for the week. The contribution towards turnover from the share totaled to Rs.246.1 million.

Ceylon Theatres and its subsidiary Cargills, both of which are illiquid counters witnessed significant quantities trade on Friday. Around 0.1 million of Ceylon Theatres shares traded on Friday, at a substantial discount to the market, leading prices to fall by a significant 51.6 percent this week. The counter was the top looser for the week, closing at Rs.1451.50 per share, while it was seen trading between a high of Rs.1600 per share and a low of Rs.1450 per share.

Subsidiary company Cargills also saw its share price slide this week, with its share price falling by 26.8 percent WoW, to close at Rs.450 per share. The counter traded at a high of Rs.580 per share, while the contribution towards total weekly turnover amounted to Rs.146.4 million.

Substantially low volumes of SLT traded this week, compared to last week, with 2 million shares trading this week. Last week a significantly higher 7.3 million of SLT shares were seen trading. The contribution towards weekly turnover was a meager Rs.73.9 million this week, while the share price too showed a decline, falling by 3.9 percent. The share closed at Rs.37 per share, while touching a high of Rs.38 per share for the week.

Other telecom counter Dialog too showed similarly low volumes trade this week, with 1.5 million shares trading, compared to 3 million traded last week.

Total turnover this week amounted to Rs.2.2 billion, with average daily turnover standing at Rs.440.8 million. The major part of turnover came on Friday contributing Rs.1.5 billion, with the above trades on Millers, NDB etc. Foreign investors seemed to have kept to the sidelines this week, with foreign participation being significantly low at 7.2 percent of total activity. Foreign purchases declined by 22 percent this week to stand at Rs.267.2 million this week, while foreign sales showed higher decline of 83 percent to amount to Rs.109.3 million for the week. A modest net foreign inflow of Rs.99 million was recorded for the week.

Nawaloka, Tokyo Cement (Non Voting), V Capital Ltd., Tess Agro and SLT were amongst the highest traded stocks this week in terms of volume.

In the meantime in their point of view the HNB Stockbrokers indicated that the sluggish sentiment would continue and the indices couldn’t sustain the positive momentum gathered during the last week as profit taking dragged the indices to negative territory. Meanwhile the activity levels (excluding crossings) also dried out significantly ahead of the New Year season compared to the last few weeks. Overall, both All Share Price Index (ASPI) and Milanka Price Index (MPI) lost 2.55 percent and 2.48 percent respectively.

Inflation stands at 16.8 percent in March

The average annual inflation increased to 16.8 percent in March compared to 15.8 percent in February and likely to climb further in the coming 1-2 months. However the Month on Month (MoM) inflation in March declined by 1.7 percent largely due to the decrease in prices of food items such as rice, sugar, vegetables etc.

In the opinion of HNB Stockbrokers, although food prices came down in March the high demand expected during the Sinhala and Hindu New Year season would result in a price increase in all the key food items such as rice, vegetables etc. causing the annual average
inflation to increase further. Thus in their opinion CCPI annual average inflation is likely to hit 17.5 percent in April 2007 and remain at same levels in May 2007 as well.

Low retail participation to drag activity levels down

The HNB Stockbrokers do not expect a major shift in the market sentiment, thus the indices would continue to remain volatile during the coming week. Furthermore the anticipated low retail participation due to the Sinhala and Hindu New Year season is likely to drag the activity levels down to around Rs.250 – 300 million on a daily average basis. However the HNB Stockbrokers feel that investors should closely monitor the market and capitalize on the bargain hunting opportunities that exists in the market place.

- Asian Tribune -

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