Indices dip as market goes through correction
BOURSE: The market went through a correction last week with
both indices slumping significantly. For the 1st four days of the week
(Monday - Thursday) the ASPI (All Share Price Index) fell by 139 points
or 4.7%, while the more sensitive MPI (Milanka Price Index) declined by
242 points or 5.8%.
On Friday the market picked up moderately, however failed to makeup
for the losses recorded over the previous four days. It should be noted
that even though both indices gained on Friday, activity levels were
lowest for the week, while trading volumes too remained low.
The ASPI closed the week at 2862.2 points down by 119 points or 4%
compared to last week, while the MPI dropped by 207 points or 4.95%
closing the week on Friday at 3799.2 points.
As highlighted in one of our previous updates a market correction
remains a healthy sign being a part of the cycle a stock market goes
through and we reiterate the fact that there is no reason for investors
Blue chip counter JKH became the highest contributing counter towards
turnover this week, contributing Rs.492.1 million towards weekly
Being in line with the declining market trend JKH share price dipped
by 3.6% this week, closing at Rs.181 per share.
During the week approximately 2.6 million JKH shares traded, with the
majority of 2.1 million shares trading on Tuesday. The trade, which went
through on Tuesday, saw a boost in foreign purchases, as the trade went
through as a local to foreign sale.
Investor appetite remained on telecom counters amid the share price
of both SLT and Dialog declining this week.
The SLT share price declined by 7.2% compared to last week, closing
at Rs.38.50 per share, while during the week the counter traded between
a range of Rs.42.50 per share and Rs.36.50 per share. SLT saw 5.3
million shares trade this week, with the contribution towards weekly
turnover amounting to Rs.205.5 million.
Dialog too showed a decline in its share price this week falling by
5.4% compared to last week, however the decline remained lower than what
was witnessed in SLT. The counter closed the week at Rs.26 per share,
while trading at a high of Rs.27.75 per share and a low of Rs.25.75 per
Around 3.9 million of Dialog shares traded this week, with the
counter contributing Rs.104.5 million towards total turnover.
Distilleries was yet another counter, which saw its share price,
decline sizably this week. The share price of the counter fell by 7.3%
to close at Rs.115 per share, while the lowest price it touched was
Rs.113 per share.
Contribution from the counter towards weekly turnover amounted to
Rs.87.4 million, while a low 0.7 million of Distilleries shares traded
for the week.
Looking at the top decliners for this week, it was dominated by hotel
sector counters. The looser this week was Hotel services Ltd., apart
from which three, hotel sector counters namely, Confifi Hotels,
Associated Hotels and Seredib Hotels came under the top 10 losers for
Total turnover this week was significantly low, falling by 42%
compared to last week, to stand at Rs.1.7 billion. Average daily
turnover remained at a low of Rs.373.4 million.
Foreign participation this week amounted to 29.7% of total activity,
standing a little above last weekâ€™s participation level of 27.6%.
Foreign investors were net buyers this week amounting to Rs.342.3
Foreign purchases thus remained higher than sales, totalling Rs.725.9
million, with Tuesday grossing in the major part of foreign purchases
amounting to Rs.409.3 million, due to a trade on JKH shares.
Foreign sales meanwhile amounted to Rs.383.6 million. Both foreign
purchases and sales remained lower than last week.
SLT, Dialog, Nawaloka, Sierra Cables and Kelsey were among the
highest traded stocks for the week.
Point of view
Indices to fluctuate in a wide range
Much anticipated correction was witnessed in the market as investors
were aggressively looking at profit taking opportunities. Meanwhile as
expected by us, the activity levels dropped significantly by 42%
compared to last week. Overall the market came down by 3.97% or 118.5
points compared to last weekâ€™s closing level.
Mixed sentiments to continue
We do not expect a major shift in the market sentiment, thus the
overall trend is likely to remain marginally negative on modest trading
volumes during the coming week.
However we believe that bargain hunters would enter the market at
different levels enabling the indices to somewhat hold its ground.
Therefore in our opinion a mix of profit taking and bargain hunting
would keep the indices volatile offering investors with day trading
Furthermore we advise investors to closely monitor the market in
order to pick up growth counters such as SLT, Dialog and Distilleries at
bargain price levels.