Market turns north on thin volumes

STOCK MARKET: Market managed to turn positive after 5 weeks as bargain hunters looked to grab high cap counters such as DIAL, SLT and Distilleries in the market place.

Both All Share Price Index (ASPI) and Milanka Price Index (MPI) moved up throughout week (Monday to Friday), however downward pressure on indices was witnessed on Friday in the back of profit taking.

Overall the ASPI picked up by 77.4 points or 3.25% to close the week at 2461.5 points while the liquid MPI gained 130.6 points or 4.01% to close at 3390.2 points compared to last Friday’s closing levels.

Over the week Distilleries topped the turnover list by contributing Rs. 90.05 million to the total market turnover. The counter gained 7.8% during the week and saw 1 million of its shares changing hands this week within a price range of Rs. 83.50-Rs. 90.00 before closing at Rs. 89.50 per share on Friday.

Renewed interest was seen on Touchwood Investments counter with its share price appreciating by a high 29.9% to close the week at Rs. 66.25. During the week’s trading, the stock touched a high of Rs. 75 and a low of Rs. 52.50.

The Touchwood counter was the 2nd highest contributor towards the weekly market activity with an Rs. 89.3 million turnover.

JKH became the 3rd highest contributor towards the total market turnover this week with a turnover of Rs. 49.35 million. Over the week 0.4 million shares of JKH traded with a highest price of Rs. 130 and a lowest price of Rs. 128 before closing at Rs. 128.25 on Friday.

The price of the JKH counter declined marginally by 0.96% compared to last week’s closing levels. Ranking in the 4th place for the week was the telecom giant Dialog with a total turnover of Rs. 28.9 million.

Dialog saw its prices appreciating by 7.14% during the week before closing at Rs. 22.50 on Friday. Over the week a total of 1.3 million Dialog shares changed hands with a volume of 0.7 million trading on Tuesday.

Overall, trading activity remained dull throughout the week where the daily turnover reached one of its lowest in recent times to stand at Rs. 46.4 miilion on Thursday. The total turnover for the week amounted to Rs. 476.80 million indicating a drop of 12.2% while the average daily turnover stood at Rs. 95.36 million.

The activity by foreign investors for the week declined drastically compared to last week where a drop of 35% & 67.2% was witnessed in foreign buying and selling respectively.

Foreign purchases during the week stood at Rs. 153.30 million while foreign sales amounted to Rs. 70.70 million resulting in a net foreign inflow for the week of Rs. 82.60 million.

The foreign participation fell significantly this week to 23.49% compared to 41.6% during the last week. Most traded stocks during the week were Nawaloka, Dialog, Touchwood Investments, Vanik and Distilleries.

Mix of bargain hunting and profit taking to keep the market volatile Market turned positive after 5 weeks as bargain hunters started accumulating undervalued bluechips such as telecom stocks.

However as expected, the market activity remained low with average daily turnover levels only managing to reach Rs. 95.4 million. During the week All Share Price Index (ASPI) gained 77.4 points while the sensitive Milanka Price Index (MPI) increased by 130.6 points compared to last week’s closing levels.

In our opinion the indices would remain volatile in the coming week as a mix of profit taking and bargain hunting expected to continue in the market place. Meanwhile the relatively low activity levels seen in the past few weeks would likely continue in the week ahead with limited retail participation expected.

However we feel investors would show interest on counters such as SLT, Distilleries, Commercial Bank and Sampath Bank, which seems to trade at attractive valuations. Thus we advise investors to stick to these undervalued counters while capitalising on possible trading opportunities in the market.

Furthermore during the coming week, more companies are likely to come out with their financial performances for the quarter ending June 30.

In our opinion most of the blue chip counters would post healthy corporate earnings despite high interest rates and inflation, which prevailed in the economy during the period under consideration. Thus we retain our 22% market earnings growth forecast for the calendar year 2007.

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