The Bourse Weekly Performance (Week ended December 06th,2013)

The Colombo stock market which trended downwards at the beginning of the week gradually gained momentum from mid week to close with a WoW gain, whilst foreign investors became net buyers during the week. The ASI gained 35.2 points WoW to close at 5,810.2 points (0.6%), whilst the S&P SL20 Index gained 8.5 points WoW to close at 3,183.1 points (0.3%). Indices benefited mainly on the back of gains made by Nestle Lanka (+16.3% WoW), Ceylon Tobacco (+7.6% WoW), Lanka Orix Leasing (+5.3% WoW), Capital Development and Investment (+5.5% WoW) and Singer Sri Lanka (+5.7% WoW)

The Benchmark index gradually strengthened during the week supported by gains witnessed in few large cap stocks, whilst healthy market turnover was witnessed throughout the week. Several crossings and high net worth transactions on the normal board drove the market turnover, whilst retail participation remained low during the week. Low retail investor participation could be partly attributable to investors adopting a wait and see approach ahead of the monetary policy rate decision next week. Commercial Leasing and Finance emerged as the week’s top turnover contributor adding c. 30.3% to the week’s total turnover mainly driven by crossings witnessed throughout the week.

Commercial Leasing and Finance that featured crossings of 90mn shares at LKR5.0 on Tuesday and Thursday, and a crossing of 46m shares at LKR5.0 on Friday, also emerged as the highest volume traded stock for the week with a cumulative c. 284.7mn shares being traded over the week. In addition, counters such as Lanka Orix Leasing, John Keells Holdings, Nestle Lanka and Orient Garments also witnessed crossings during the week. On the back of these large trades daily average turnover for the week increased to c. LKR 938.3mn against LKR 493.5mn recorded during the previous week.

Meanwhile Central Finance announced its first interim dividend of LKR0.85 per share whilst Access Engineering announced an interim dividend of LKR0.25 per share. In addition CSE approved the listing of National Development Bank’s LKR10bn worth debentures on the Main board and Nations Trust Bank’s LKR3bn worth debentures to be listed on the main board. Retail investors pursued counters such as PCH Holdings, Expolanka Holdings and Blue Diamonds Jewllery Worldwide. Further the week recorded a total share volume of 508.8mn against 388.1mn recorded in the previous week, which is a 31.1% WoW gain.

The week saw foreign purchases amounting to LKR1,334.5mn, whilst foreign sales amounted to LKR998.6mn. Market capitalisation stood at LKR 2,417.3bn and the YTD performance is 3.0%.


Conclusion: Shift towards fixed income securities could dampen equity market activity..
Performance at the Colombo bourse displayed an improvement as the indices gained WoWwith the cumulative daily turnover and volume advancing over the previous week and foreigners becoming net buyers with a net inflow of LKR 336.0mn against an outflow of LKR 67.0mn reported in the previous week. However, activities were largely driven by crossings and block trades that were witnessed on selected index heavy weights with the support of institutional and high net worth buying, whilst retailer participation remained passive with the interest centered mostly on small cap penny stocks.

Subsequent to exempting interest income on listed debentures 2013 has witnessed several Banks and Finance companies issuing(as well as in the process of issuing) debentures, which are redeemable and attached with attractive rates (c. 10%-14% p.a) that are tax free. Thereby, despite the fact that debentures being relatively illiquid over equities, stable return offered with lower risk compared to the equity market return is mostly likely to induce investors to shift towards listed fixed income securities amidst the lackluster performance of the equity market over the past few years. This is to say that amidst the drop in market interest rates attractive rates provided by listed debentures are likely to provide an alternative investment mode to traditional savings accounts and equity market.
To read the entire report - http://research.srilankaequity.com/t865-06-12-2013-weekly-review-asia-wealth-management-co-ltd

http://www.sundayobserver.lk/2013/12/08/fin52.asp

Nestle Drives Up Indices

Nestle, the market’s third largest capitalized stock almost single handedly uplifted market indices at Friday’s trading, because of its share price increasing by 15.38% to Rs. 2,249.90 over its previous day’s close on a transaction, data showed.

As a result, the benchmark ASPI increased by 0.51% over its Thursday’s close to finish the week at 5,810.24 points; while the newly introduced S&P SL 20 Index went up by 0.68% to 3,183.09 points on a Rs. 779.8 million turnover.

Nestle is reflected on both the ASPI and on the S&P SL 20 Index. Further, the movements of these indices are correlated to the movement of market capitalization. Because of Friday’s transaction, Nestle’s market capitalization increased sharply, thereby having an overall effect on total market capitalization, which also resulted in the values of the indices too increasing sharply.

Nestle was subjected to a foreign buy on the back of local selling, which resulted in the bourse experiencing a net foreign inflow (NFI) of Rs. 126.46 million on Friday, taking overall NFIs for the year to date to Rs. 22.9 billion.

Nestle’s contribution to the day’s turnover was Rs. 168.3 million, however, it was superseded by Commercial Leasing & Finance plc, an LOLC company, which made the highest turnover for the day with a figure of Rs. 231.4 million.

Poor Quarterly Earnings
Nevertheless, poor quarterly earnings of listed companies for the quarter ended September 30, 2012; coupled with rising NPLs in financial institutions and the uncertainty in regard to laws pertaining to gambling investments, have been attributed to the bourse’s listless performance as a whole these days.

The only bright spot is the seeming fall in interest rates. In a falling interest rate market, theory says that that may induce investors to once more seek the stock market as a better investment tool, in order to get a higher return on their investments.

Meanwhile the bourse, after a lapse of nearly a month, passed the Rs. one billion mark at Thursday’s trading.

In this process, it was assisted by LOLC and its subsidiary Commercial Leasing & Finance which contributed Rs. 863.5 million (66.4%) to the day’s turnover of Rs. 1.3 billion.

Two Prima companies, namely Ceylon Grain Elevators and Three Acre Farm chipped in with another Rs. 257.8 million-19.8% of the day’s turnover, with these four stocks alone contributing to 86.2% of the day’s turnover and the rest, a mere 13.8%.

However, market indices after a brief pause took a tumble on Thursday, with the ASPI going down by 0.04% over its Wednesday’s close to 5,780.58 points and the S&P SL 20 Index by 0.11% to 3,161.62 points.

The bourse also received a NFI of Rs. 292.12 million, taking up its NFIs for the year to date to Rs. 22.8 billion.

The bourse last crossed the Rs. one billion mark on November 8, making a turnover of Rs. 1.6 billion then.

Foreign Selling
At the beginning of the week on Monday, foreign selling of blue chip JKH’s shares, the market’s largest capitalized stock dominated trading, resulting in a net foreign outflow (NFO) of Rs. 32.34 million, though, in the year to date, the market has had experienced an NFI of Rs. 22.6 billion.

As a result, the ASPI fell by 0.02% over its previous day’s close to 5,774.10 points, while the S&P SL 20 Index declined by 0.28% to 3,165.88 points on a Rs. 835.1 million turnover, with JKH contributing to the single highest figure with Rs. 204.1 million, followed by Orient Garments (Rs. 137.2 million) and LIOC (Rs. 114.2 million). These three stocks contributed to 54.5% of Monday’s turnover.

On Tuesday the bourse suffered a NFO of Rs. 105.30 million, following a similar performance the previous day, therewith bringing down its NFI figure in the year to date to Rs. 22.45 billion, from the previous day’s number of Rs. 22.56 billion.

Market indices contracted for the second consecutive day, with the ASPI shrinking by 0.02% over its previous day’s close to 5,773.12 points and the S&P SL 20 Index by 0.16% to 3,160.94 points on a Rs.960.8 million turnover, helped by Commercial Leasing & Finance, an LOLC company, which contributed nearly 50% of this amount with Rs. 450.2 million.

However Commercial Leasing Finance and its parent LOLC uplifted Wednesday’s stock market turnover to Rs. 794.5 million, by contributing nearly half (Rs. 388.5 million) of that figure.

Almost in tandem with these developments, the ASPI increased by 0.17% over its previous day’s figure to 5,782.92 points; while the S&P SL 20 Index was uplifted by 0.13% to 3,165.05 points.

The market experienced a Rs. 54.98 million NFI, taking NFIs for the year to date to Rs. 22.5 billion.
http://www.thesundayleader.lk/2013/12/08/nestle-drives-up-indices/