The Bourse continued to lose grounds as the ASPI decreased by 98.6 points (or 1.48%) to close at 6,567.43 points, while the S&P SL20 Index decreased by 38.4 points (or 1.00%) to close at 3,784.51 points.
JKH was the highest contributor to the week’s turnover value, contributing LKR 1.20Bn or 34.25% of total turnover value.
Chevron Lubricants followed suit, accounting for 11.12% of turnover (value of LKR 0.39Bn) while Access Engineering contributed LKR 0.25Bn to account for 7.12% of the week’s turnover.
Total turnover value amounted to LKR 3.49Bn (cf. last week’s value of LKR 2.59Bn), while daily average turnover value amounted to LKR 0.70Bn (35.0% W-o-W) compared to last week’s average of LKR 0.52Bn.
Market capitalization meanwhile, decreased by 1.47% W-o-W (or LKR 44.44Bn) to LKR 2,978.70 Bn cf. LKR 3,023.15 Bn last week.
Liquidity (in value terms)
The Diversified Sector was the highest contributor to the week’s total turnover value, accounting for 42.87% (or LKR 1.50Bn) of market turnover.
Sector turnover was driven primarily by JKH, Expolanka Holdings & Browns Capital which accounted for 93.42% of the sector’s total turnover.
The Manufacturing Sector meanwhile accounted for 20.98% (or LKR 0.73Bn) of the total turnover value with turnover driven primarily by Chevron, Tokyo Cement & Teejay Lanka which accounted for 82.84% of the sector turnover.
The Banking, Finance & Insurance Sector was also amongst the top sectorial contributors, contributing 19.35% (or LKR 0.68Bn) to the market driven by commercial Bank & Sampath Bank which accounted for 41.52% of the sector turnover.
Liquidity
(in volume terms)
The Diversified Sector dominated the market in terms of share volume, accounting for 50.20% (or 68.24Mn shares) of total volume, with a value contribution of LKR 1.50Bn.
The Banking, Finance & Insurance sector followed suit, adding 16.65% to total turnover volume as 22.64Mn shares were exchanged.
The sector’s volume accounted for LKR 0.68Bn of total market turnover value.
The Manufacturing Sector meanwhile, contributed 14.69Mn shares (or 10.81%), amounting to LKR 0.73Bn.
Top gainers and losers
PC House was the week’s highest price gainer; increasing 100.0% W-o-W from LKR 0.10 to LKR 0.20. CIFL gained 33.3% W-o-W to close at LKR 1.20 while Royal Palms gained 12.2% W-o-W to close at LKR 25.80.
Trade Finance (+11.8% W-o-W) and Raigam Saltners (+11.1% W-o-W) were also amongst the gainers.
Kelsey Developments was the week’s highest price loser, declining 17.8% W-o-W to close at LKR 42.00.
Adam Investments (-16.7% W-o-W), Citrus Hikkaduawa (-16.1% W-o-W) & Udapussellawa Plantations (-14.8% W-o-W) were also amongst the top losers over the week.
Foreign investors closed the week in a net buying position with total net inflows amounting to LKR 0.88Bn relative to last week’s total net inflow of LKR 0.89Bn (-1.20% W-o-W).
Total foreign purchases increased by 53.12% W-o-W to LKR 1.97Bn from last week’s value of LKR 1.29Bn, while total foreign sales amounted to LKR 1.10Bn relative to LKR 0.40Bn recorded last week (+173.17% W-o-W).
In terms of volume, Expolanka & JKH led foreign purchases while Chevron & Browns Capital led foreign sales. In terms of value, JKH and Expolanka led foreign purchases while Chevron and Seylan Bank led foreign sales.
Point of view
Shares fell for the third consecutive week, ending at an ~14-week low as profit-taking on the back of tax policy concerns and initial corporate earnings weighed down the Index.
Concerns over the Inland Revenue Bill continued to dominate market sentiment, resulting in the Benchmark price index losing a cumulative of ~200 points over the past three weeks, and dragging down Y-T-D returns on ASPI to 5.4% (cf. 8.6% recorded three weeks ago).
Although average turnover levels hovered around LKR ~0.70Bn (+35 W-o-W) due to active participation by foreigners and resulted in high turnover levels on Tuesday (Rs.1.22Bn) and Wednesday (Rs.0.98Bn), average turnover levels tumbled to ~LKR 0.43Bn during the rest of the week.
Crossings meanwhile, amounted to 39% of total market turnover over the week, with active participation in conglomerate JKH (69% of crossings).
Foreign buyers meanwhile, remained net buyers for the 27th consecutive week, and although net inflows for the week remained broadly the same as last week (LKR 0.88Bn), YTD net inflows on the CSE amount to LKR 25.8Bn compared to a net outflow of LKR ~5.0Bn recorded during the same period last year.
Market momentum in the week ahead is likely to be influenced by remaining corporate earnings for the June Q1 2017.
CBSL holds policy rates steady for third time
The Central Bank left policy rates unchanged for the 3rd consecutive month this year, citing waning inflation levels and stronger global growth prospects.
The Monetary Authority noted that the domestic economy is expected to recover modestly over the remaining three quarters of 2017 amid the rebound in agriculture activity and the reinstatement of GSP+ to the EU.
The Central Bank also noted the positive developments in inflation, adding that inflation has moderated at a faster pace over the recent month despite supply-side disruptions on the back of floods in the month of May.
The Central Bank added that inflation is forecasted to ease further towards Q4’17 due to the tighter monetary policy stance maintained since end of 2015 and as the ‘one-off’ impacts (particularly from the VAT revisions) ease.
The Central Bank also noted that although private credit growth remained high over May and June, signs of deceleration exist although at a slow pace.
The Monetary Authority added though, that higher market interest rates should moderate this growth over the remained of the year and that the recent decline in G-Sec yields, should gradually transmit to other market interest rates in the next few month.
The Central Bank further noted that gross official reserves stood at US dollars 6.7 billion as at end July 2017 and that LKR depreciation (against the USD) so far this year has been 2.6%.
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