Market ends in negative note
During the week the All Share Price Index (ASPI) declined by 139.05 points to close at 5,586.39 points, while the Milanka Price Index (MPI) lost 108.69 points to close at 4,813.12 points. The daily average turnover was Slrs.993mn compared to SLR.1,329MN last week and the week ended with foreign buying amounting to Slrs.731mn whilst foreign selling was Slrs.603mn.
On Monday the market closed up on a positive note with both ASPI and MPI gaining 30.12 points and 54.40 points respectively. Total tur nover amounted to Slrs.1.4bn to which the largest contribution was made by NDB which closed up SLRS.3.70 at 127.00 with approximately 2.85mn shares changed hands with the buyer being a foreign institution and the seller being a local individual.. Commercial Bank non-voting share reached a high of SLRS.92.00 but closed up SLRS.5.40 at 88.50 and posted the day’s second largest turnover. ACME printing was actively traded between SLRS.23.10 and 26.80 and closed up SLRS.3.00 (12.8%) at SLRS.26.40 being the day’s top gainer.
After gaining for four consecutive days, the market declined on Tuesday, led by profit taking by investors. ASPI and MPI dipped 61.64 points and 50.30respectively, while total turnover was limited to Slrs.831mn. ACME printing posted the day’s largest turnover and the share closed up SLRS.3.30 (12.5%) at 29.70 with approximately 6mn shares traded.
ACME posted the day’s largest tur nover on Wednesday with 12.2mn shares traded between SLRS.28.50 and 34.30, while the share closed upslrs.3.80 (12.79%) at SLRS.33.50. Approximately 1.3mn shares of JKH changed hands during the day of which majority traded at SLRS.170.00.
Environmental Resources ( GREG) had an extraordinary general meeting during the day and the proposed extension of the expiration date of its 2012 warrant (GREG. W0002) was approved by its shareholders, however this was subject to a restriction on trading such warrants after the 23rd of February 2012 as per a directive issued by the Securities & Exchange Commission of Sri Lanka. Since investors will not be able to liquidate the warrant after the said date for more than one and half years, resulted in panic selling and the warrant closed down SLRS.5.50 (50%) at 5.50 hampering the market sentiment.
ACME continued to post the day’s single largest turnover for the third consecutive day on Thursday with 7.25mn shares traded, while the share closed down SLRS.8.60 (26%) as the company reported a loss for the 9 months ended 31st December 2011. JKH posted the day’s second largest turnover with 584,400 shares traded between SLRS.167.00 and 170.00. GREG 2012 warrant further declined and closed down SLRS.3.90 (71%) at SLRS.1.60 and the company announced that the warrant will stop trading in the secondary market as of end of trading on 03rd February 2012. Steep decline in the above warrant triggered panic selling in GREG group of shares and warrants, thus the market closed down with ASPI and MPI losing 76.84 points and 68.35 points respectively.
Friday was a short trading day thus the total turnover remained relatively low at Slrs.420mn while both indices closed down with ASPI losing 19.10 points while MPI lost 27.99 points. Commercial Bank reported the day’s largest turnover of Slrs.149mn while Distilleries posted the second largest turnover of Slrs.24mn. GREG 2012 warrant which seized trading at the end of the day closed up 87.5% at SLRS.3.00 generating a turnover of Slrs.18mn.
The Central Bank on Friday increased the policy rates by 50 basis points to 9.0% to curtail the rapid credit growth driven by accelerated post war development projects. This move will also stabilize the exchange rate as liquidity in the banking system was low due to the Central Bank intervention in defending the Rupee. Despite the higher finance cost we expect the equity market to remain an attractive investment option as shares of companies with continued profit growth are trading at discounted prices, and has great potential to generate substantial returns in the medium to long term.