Investor confidence tested

STOCK MARKET: Both the market indices continued its negative trend throughout this week.

The week started on a negative note, with investor confidence been tested over the weekend after two LTTE planes were witnessed flying over the skies of Colombo in early hours of Sunday for the second time within a period of just over one month.

ASPI (All Share Price Index) closed the week at 2787.3 points down by 1.3% compared to last week while the more sensitive MPI (Milanka Price Index) stood at 3845.6, down by 1.15%.

JKH, this week continued to be the highest contributor towards market turnover, contributing Rs.260 million towards the week’s turnover.

It is also noteworthy that JKH alone contributed 60% of the total market turnover for the week. JKH turnover for this week was 13 times more than that of SLT’s, which became the second highest contributor towards the Week’s turnover.

JKH counter during the week traded at a high of Rs. 149 per share and a low of Rs. 146 per share. The Counter closed the week at Rs. 149, which is up by 1.36% compared to last week.

As mentioned earlier SLT became the second highest contributor towards market turnover this week, contributing Rs. 19.7 million towards weekly turnover. The Counter traded within a thin margin of Rs. 38.5 and 37.75 during the week while closing the week at Rs. 38 per share down by 1.3% week on week.

Banking sector stock, NDB managed to attract considerable investor interest this week becoming the third highest contributor towards the weekly turnover.

93,100 NDB shares were seen trading during this week contributing Rs. 16.87 million towards this week’s market turnover.

NDB traded within a range of Rs. 185 and Rs. 180 during this week closing at Rs. 180. Comparing week on week the counter lost 2.7% during this week.

Dialog, which remained among investor interest during the last couple of weeks failed to attract significant interest during this week.

The Counter contributed a mere Rs. 5 million towards the weekly turnover, while the share price dropped by 1.8% to close the week at Rs. 26.50.

Dialog also announced its fist quarter results for 2007, which remained flat compared to the corresponding period last year.

Turnover for the week amounted to Rs. 439.6 million, while trading was limited to just three days this week. Average daily turnover for this week stood at Rs. 146 million which is marginally down by 7% compared to Rs. 157 million recorded for last week.

Foreign investors remained net buyers this week amounting to Rs. 52.2 million. Foreign purchases showed a marginal 5% decline to stand at Rs. 260.4 million, while foreign sales witnessed a 22% decline to amount to Rs. 208.2 million. Foreign participation improved this week to 53 % of total activity compared to 35% last week.

JKH, Seylan Bank NV, Ceylon Glass, Marawila Resorts and Tokyo Cement NV were among the highest traded stocks for the week.

Market continued to remain dull with activity levels only managing to reach Rs. 146.5 million on a daily average basis as trading was limited to only 3 market days. All Share Price Index (ASPI) dipped 37.3 points during the week to stand at 2787.3 compared to last week’s trading levels.

Price levels decreased in April over March, deviating from the seasonal increase usually observed for this month.

The April Colombo Consumer Price Index (CCPI) stood at 5025.4 points down by 4.2 points compared to March CCPI. However annual average CCPI continued to move in the upward direction to stand at 17.4% in April compared to 16.8% in the previous month.

The decline in the CCPI during April was mainly due to the price decrease in Food category, which has the highest weightings.

The prices of key food items such as rice, vegetables, dried chillies declined in the back of higher supply of locally produced agriculture products.

In May 2007 we expect the annual average inflation to start coming down for the first time since April 2006. Thus according to our projections the inflation in May is expected to stand at 17.3% and further decline towards the latter part of the year mainly due to continuous monetary policy tightening.

We expect an improvement in the market momentum, as investors would be looking to collect counters that come up with strong corporate earnings for the quarter ended 31/03/2007, during the next couple of weeks.

Furthermore, the activity levels that stood low during this week may get a boost with investor coming back into the market after the Vesak holidays.

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