JKH boosts market turnover

A slight slow down of the market was witnessed during the week with the ASPI falling initially and the MPI settling into a narrow range. However the ASPI managed to pick on Friday by 25.4 points.

Comparing week on week the ASPI was down by an insignificant 0.50% or 12.4 points to close at 2449.1 points while the MPI declined by 0.52% or 17.6 points to 3372.6 points.

The highlight for the week was the JKH trade, which went on during the mid week.

Foreign interest on JKH lead the counter to be the highest contributor to this week’s turnover representing 74.8% or Rs.914.47 million of the total market turnover of Rs.1.22 billion.

Majority of the shares were traded to foreign buyers on Wednesday, which amounted to 4.3 million shares with a turnover of Rs.546 million. The share price of the counter witnessed a gentle drop of 0.97% to Rs.127 compared to last week’s closing price of Rs.128.25.

NDB the banking sector counter traded 0.25 million shares during the week within a price range of Rs.160 - 165 per share managing to get into the limelight once again. 3.35% of the total market turnover was reflected by the NDB counter, which amounted Rs.40.96 million in absolute terms.

Renewed interest was witnessed in CIC with 0.52 million of its shares trading and recording a turnover of Rs.18.74 million for the week. The counter closed at Rs.35 on Friday with a dip of 3.44% in its share price compared to last week.

Apart from NDB and CIC the other stock, which managed to get back into investor attention, was Walker & Greig.

The counter observed an impressive 20% appreciation in its share price, whilst trading at a price range of Rs.7.50 & 9.50. The counter closed at Rs.8.75 on Friday while contributing Rs.15.46 million to the weekly turnover.

Activity level for the week remained highly volatile during the week with the only market achieving a turnover Rs.55.7 million on Monday and reaching high as Rs.633.3 million turnover on Wednesday.

Overall, compared to last week the activity level has shown a substantial growth of 156.1% to stand at Rs.1.22 billion and the average daily turnover to Rs.244.26 million.

As mentioned above the activity level mainly consisted of the JKH foreign trade on Wednesday, which owned the most proportion of Wednesday’s turnover.

Foreign participation remained at a significant 49.46% mainly attributing to the foreign interest on JKH. Both foreign purchases and sales reported substantial increases of 497.8% & 312.4% respectively compared to last week.

Foreign purchases went up to Rs.916.4 million and foreign sales to Rs.291.60 million this week with comparison to Rs.153.3 million and Rs.70.7 million of last week. Overseas investors remained net buyers for the period with a net inflow of Rs.624.8 million.

Tess Agro, JKH, Taj Lanka, Ceylon Glass and Walker & Greig were the mostly traded stocks for the week.

As expected by us, the indices remained highly volatile during the week with a slight improvement witnessed in activity levels. During the week both All Share Price Index (ASPI) and Milanka Price Index (MPI) lost further ground to end at 12.4 points and 17.6 points respectively.

We expect a similar pattern to exist in the market during the coming week with activity levels remaining at relatively low levels. Even with low activity levels we believe the investors are presented with trading opportunities in the marketplace.

Furthermore the market would be searching for direction from the macro front during the coming weeks, thus we feel that investors should closely monitor the developments in the political front, as market is likely to be sensitive to these macro changes.

The inflation measured by Colombo Consumers Price Index (CCPI) jumped in July in the back of galloping domestic fuel prices.

The point-to-point inflation increased to 17.6% in July compared to 13% in June while the annual average inflation increased to 17.2% compared to 17% month ago.

The main reason behind the inflationary pressures in July can be attributed to the domestic fuel price increases lead by kerosene, which saw a 31% rise compared to June.

Furthermore the price increases in bus fares and wheat grain also had a major impact on the July inflation. Apart from fuel and light that contributed 55.4% towards the monthly inflation the food prices also influenced towards the surge in inflation.

Meanwhile further upward price revisions were made on fuel and milk powder during the latter part of July and this we expect would add further inflationary pressures during the coming month.

Overall we expect the point-to-point inflation to climb higher to reach 18.3% while the annual average inflation is expected to rise by 0.2% to 17.4% during the month of August.

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