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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2612

Share market lacks momentum after New Year holidays

By Quintus Perera – Asian Tribune

The HNB Stockbrokers in their weekly review indicated that the market showed an upward trend during the start of this week with the indices gaining ground during the first two trading days of the week. However the trend turned negative towards the latter half of the week as All Share Price Index (ASPI) shed 57 points on Friday alone with Dialog share price dropping by 6 percent after its announcement of a 1 for 10 rights issue on Friday.

ASPI closed the week at 2766.2 points down by 1.92 percent compared to last week while the more sensitive Milanka Price Index (MPI) stood at 3753.9 down by 2.79 percent. This week too trading days were limited to less than 5 days, thus leading to low activity levels for yet another week.

Dialog remained the highest contributor towards market turnover for the second consecutive week, though it witnessed it’s share price drop by 5.8 percent compared to last week. The share price fell amid the Company making an announcement on Friday of a rights issue of 1 share for every ten shares held at a price of Rs.21 per share. The announcement also mentioned of a private placement of cumulative redeemable preference shares for the value of Rs.5 billion. The counter traded within a range of Rs.26 to Rs.24 during the week, while closing the week at Rs.24. Dialog contributed Rs.84.88 million towards the weekly turnover.

Interest was also witnessed on the cable industry giant ACL, as the Counter became the second highest contributor towards market turnover. ACL, which is trading cum bonus, touched a high of Rs.159 per share while dropping to a low of Rs.151 during the week. The Counter closed the week at Rs151 per share shedding 1.6 percent during the week. The counter contributed Rs.51.9 million towards weekly turnover.

A banking sector stock also managed to rank among the first three contributors towards market turnover this week as Commercial Bank contributed Rs.48.4 million towards the week’s turnover. The Commercial Bank share traded at a high of Rs.191 during the week while it closed at a low of Rs.185 per share representing a week on week decline of 2.6 percent. JKH was also among investor interest as the counter contributed Rs.46.7 million towards weekly turnover. JKH share traded within a range of Rs.154 to Rs.147 per share while closing the week at Rs148 per share. JKH too, keeping in line with the top three contributors for the week, saw its share price decline by 4.2 percent summing up the market sentiment for the week.

Turnover for the week amounted to Rs.548.5 million, which was a 32.1 percent improvement compared to last week’s total activity of Rs.415.2 million. However this week consisted four trading days whereas during the last week the trading was limited to only three days. Thus on a daily average basis turnover this week stood at Rs.137.13 million, marginally down by 1 percent compared to the last week’s Rs.138.4 million.

Foreign investors were net sellers this week amounting to Rs.4.4 million. Foreign purchases showed a substantial 175.6 percent improvement to stand at Rs.189.3 million, while foreign sales witnessed a sizable 65.3 percent increase to amount to Rs.193.7 million. Foreign participation improved notably this week to stand at 34.9 percent of total activity, compared to last week’s participation level of 22.4 percent.

Dialog, Seylan Merchant Bank, Colombo Land, Sierra and SLT were among the highest traded stocks for the week.

In the meantime in their point of view the HNB Stockbrokers indicated that the market experienced heavy volatility on thin volumes during the week, as most of the retail investors were yet to return to the market after the holiday season. Activity levels also remained lower than expected to stand at Rs.136.9 million on a daily average basis. During the week All Share Price Index (ASPI) dropped by a significant 1.92 percent while Milanka Price Index (MPI) shed 2.79 percent compared to previous week’s closing levels.

Quarterly results may keep investors interested

They expect a similar trend to continue in the market during the coming week with indices likely to fluctuate in a wide range. Nevertheless with investors expected to return back to the market after the holiday season, retail activity is likely to increase in the coming weeks.

Furthermore the Companies are likely to release their quarterly results for the period ending 31st March 2007 during the coming weeks, which would provide important signals for the investor community about the market earnings for the year 2007. Though the high interest rates and inflation would reduce growth in market earnings compared to last 2-3 years, sectors such as telecommunications, construction and selected banking counters are likely to post considerable earnings growth in 2007.

- Asian Tribune -

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