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Asian Tribune is published by E-LANKA MEDIA(PVT)Ltd. Vol. 20 No. 104

Holiday feeling pushes share market sideways

By Quintus Perera – Asian Tribune

The HNB Stockbrokers in their weekly market analysis indicated that with the number of trading days being restricted to 3 days, amid Monday and Friday being holidays, sluggish movement was witnessed in the market this week. Thus no significant movement was witnessed in the market this week, with the All Share Price Index (ASPI) moving sideways showing little movement compared to last week’s closing level. The ASPI closed the week at 2788.9 points on Thursday, falling by a meager 0.9 points this week. The more sensitive Millanka Price Index (MPI) however showed a greater dip falling by 22.5 points closing the week at 3815.1 points.

Renewed interest in banking counters was seen this week, as trades in NDB and DFCC managed to take the top slots in terms of contributions towards turnover. Monday saw 8.1 million of NDB shares trading, with the contribution towards turnover amounting to Rs.1.6 billion. This trade accounted for around 67 percent of total turnover for this week, thus highlighting the significance of the trade towards market activity. NDB share prices however showed a modest decline of 1.7 percent, to close the week at Rs.195.50 per share, while trading within a thin range of Rs.196-Rs.195 per share for the week.

DFCC become the second highest contributor towards turnover this week, contributing Rs.349.1 million towards weekly turnover. Around 1.8 million of DFCC shares exchanged hands this week, with the most part trading on Monday. Similar to NDB, DFCC share too witnessed a minor dip in its share price, falling 1.03 percent this week. The counter touched a high of Rs.195 per share and a low of Rs.190 per share this week, closing at Rs.192 per share for the week.

Even though as highlighted above banking sector counters saw sizable volumes of trade, the spot light this week was taken by Kapila Heavy, a construction sector counter which witnessed its prices soar this week. On Thursday 5.2 million of Kapila Heavy counters traded, with its share price showing a staggering 634.4% increase to close at Rs.58.75 percent share for the week. During trading the counter peaked at Rs.70 per share however dampening at the close of trade. Contribution towards weekly turnover from the counter amounted to a notable Rs.127.7 million.

Among other counters, which saw some interest, coming through this week were JKH and Lanka IOC. Approximately 0.3 million of JKH shares traded this week, with its share price closing unchanged this week at Rs.155 per share. The contribution towards weekly turnover however remained low at Rs.48.6 million for the week. Lanka IOC also witnessed some interest this week with 0.8 million of its shares trading. The share price of the counter closed below Rs.30 per share this week, with the counter closing at Rs.29.75 per share for the week.

Activity remained high this week in spite of the reduced number of trading days this week, as large trades boosted turnover levels. Total turnover for the week amounted to Rs.2.4 billion this week, higher than the Rs.2.2 billion posted last week. Excluding the trade on NDB and DFCC shares, which was highlighted above, the turnover for the week would have amounted to a mere Rs.439 million this week. Average daily turnover this week stood at Rs.789.1 million, showing a significant 79 percent growth in turnover comparing last week’s average daily turnover of Rs.440.8 million.

Foreign participation this week was significantly high at 87.3 percent of total activity, as the highest turnover contributors this week NDB, DFCC and Kpila Heavy went through as foreign trades. Foreign Purchases for the week totaled Rs.2.1 billion, while foreign sales were slightly lower at Rs.2 billion this week. The resultant net foreign inflow amounted to Rs.127.9 million.

Volume wise highest traded stocks this week were, NDB, Kapila Heavy, DFCC, Pan Asia and Lanka IOC.

Meanwhile in their point of view HNB Stockbrokers indicated that the holiday mood would continue for yet another week and as expected by them, the market remained dull during the week with most of the retail investors staying away from the market due to the Sinhala and Hindu New Year season. Overall the market remained relatively flat during the week with All Share Price Index (ASPI) closing the week at 2788.9, down 0.9 points compared to the previous week’s closing level.

Economy grows at a record rate of 7.4 percent in 2006 despite an ordinary 4th quarter

Performance

The Sri Lankan economy recorded its highest growth since 1978, as GDP (In real terms) expanded by an encouraging 7.4 percent in 2006. Strong performances in service and agriculture sectors that grew by 8.3 percent and 4.7 percent respectively in 2006 compared to 6.2 percent and 1.9 percent in 2005 were the main drivers of economic growth in 2006. The growth in the service sector was mainly fuelled by the healthy performance in telecommunications and financial services sub segments while the agriculture sector growth can be mainly attributed to fishing sub sector.

However the growth, which was witnessed in the industry segment that expanded by 8.3 percent in 2005, slowed down marginally in 2006 to stand at 7.2 percent in 2006.

Meanwhile, despite an encouraging performance during the full year 2006 the economic growth slowed down quite significantly during the last quarter of 2006 to stand at 6.2 percent compared to 6.4 percent in the corresponding period last year. In the opinion of the HNB Stockbrokers the slower growth during 4Q of 2006 can be partly attributed to the high inflation and rising interest rates.

Quarterly GDP growth rates in 2006

Considering the increasing rising interest rates, inflation and the escalating violence in the North and East, they estimate the GDP growth for 2007 to stands at 6.8 percent with telecommunications, construction, financial services and manufacturing sectors leading the way.

Look for accumulation while the market is sluggish

With next week’s trading again limited to just three days due to the Sinhala and Hindu New Year season, the market is unlikely to gather momentum. Thus the overall market sentiment would continue to remain sluggish with activity levels expected to stay low.

However they expect the market to find energy after next week, as investors are likely to return to the market, thus the HNB Stockbrokers advise investors to pick up stocks that are trading at attractive price levels hoping to capitalize on a possible improvement in market sentiment after New Year season.

- Asian Tribune -

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