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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2708

Market gains as investors react to military victories

By Quintus Perera – Asian Tribune

Acuity the Stock brokering arm of HNB and DFCC in their review indicated that the market kicked off year 2009 witnessing sharp gains in the back of the news reports on capturing the LTTE stronghold Kilinochchi by military forces, leading to a 5% gain in the All Share Price Index (ASPI) on Friday.

The ASPI (All Share Price Index) ended the week up by 4.8% or 72.4 points o close at 1578.5 points while the sensitive Milanka Price Index ) gained 3.0% or 48.6 points to stand at 1696.8 points compared to last week.

Ceylinco Insurance (CINS) with the help of few big deals during the week managed to become the week’s largest contributor. Total contribution by the counter amounted to Rs.108.0 million after having traded 0.6 million shares within a wide price range of Rs.150 and Rs.200 per share for the week. CINS share closed at Rs.199.75 for the week, gaining a notable 9.3% WoW. The majority portion of CINS turnover occurred on Wednesday.

Following closely in terms of activity was the blue chip JKH with a turnover of Rs.98.8 million generated through a trade volume of 2 million shares.

The counter during the week saw few big trades going through making it the highest traded stock for the week. The high cap share, which fluctuated within the price band of Rs.48.25 & Rs.52.00 per share, slipped 1.9% WoW to close at Rs.51 per share.

The week also saw some significant quantities of Distilleries stock trading adding Rs.40.5 million to the weekly turnover with a trade volume of 0.8 million shares. Share price of Distilleries gained 4.3% to close at Rs.54.50 per share for the week.

Environmental Resources’ contribution to the weekly turnover stood at Rs.17.8 million, whilst 0.9 million of its shares changed hands during the week. The stock having traded within a broad price band of Rs.14.75 and Rs.22.25 per share closed the week up by a staggering 29.2% to close at Rs.21 per share. Bulk of the counter’s turnover came on Wednesday’s trading.

Market turnover for the week rose to Rs.451.7 million from Rs.160.1 million recorded last week experiencing a significant 182.1% increase while the average daily turnover stood at Rs.112.9 million, up by 111.6% during the 4 day trading week. Although trading volumes picked up from last week market lacked the participation of retail investors.

The week saw foreign investors becoming net buyers amounting to Rs.23.4 million, with foreign purchases standing at Rs.115.9 million (down 2.8%) and foreign sales at Rs.92.5 million (up 1645.3%). Foreign participation for the week stood at 23.1% of total activity.

The most actively traded stocks during the week were JKH, Seylan Bank (Non Voting), Vallibel and Ceylinco Seylan.

In their point of view Acuity indicated that the market sentiment got a boost with the dawn of 2009 as government announced more military victories in the North. Week on Week (WoW) market picked up by 72.4 points compared to previous week’s closing levels.

The market reacted positively towards government’s efforts to liberate terrorist held areas in the North over the last week. However in their opinion restoring democracy in the North as it was done in the East would be vital in order to boost investor confidence and to reap benefits for the broader economy.

Furthermore Acuity highlights the importance of finding a political solution to the problem while combating terrorism by military means. In the week ahead they expect the sentiment to remain positive with volatility expected on indices.

Meanwhile in their Economic Update Acuity indicated that Sri Lanka’s inflation as measured by CCPI-N declined to 14.4% YoY in December, the lowest since June 2007. Although seasonal demand put some pressure on food prices, the spill over effects of lower fuel prices as reflected by transport costs helped ease inflation during the month. Meanwhile annual average inflation ended the year 2008 at 22.6% as per the official data.

Lower energy prices proposed by the government’s latest stimulus package in their opinion will help speed up the decelerating trend in inflation in the coming months.

Their medium term inflation outlook remains unchanged with domestic price levels expected to ease out further supported by declining commodity prices. According to their projections point-to-point inflation in January shows a decline to 10.8% YoY while the annual average inflation is projected at 21.6%.

- Asian Tribune -

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