Quote for the day

“Deciding when to cut your losses is one of the toughest decisions for anyone to make, but traders at the top of their game know that they always have to make the decisions they need to make, which may or may not be the ones they want to make” – Doug Hirschhorn

Foreign interest sustained as indices surge..

The All Share Index rose 129.28 points WoW to close at 5,875.77 points (2.2%), whilst the S&P SL 20 Index rose 40.49 points WoW to close at 3,174.36 points (1.3%). Indices rose mainly due to the gains made by Ceylon Tobacco (5.4% WoW), Sri Lanka Telecom (10.5% WoW), Lanka ORIX Leasing Company (10% WoW), Distilleries Company of Sri Lanka (3.8% WoW) and John Keells Holdings (0.9% WoW).

Both indices were off to a slow start but subsequently gained considerable momentum on the back of heavy local and foreign institutional interest which resulted in a jump in the YTD return to 4.1% by the end of the week. The spurt in foreign investor interest over the week may have been partly attributed to the upward revision in the World Bank’s estimates for the growth prospects for the economy. Further the declining interest rates coupled with the Central bank’s decision to keep policy rates stable raises the relative attractiveness of equity in comparison to debt securities. On this backdrop a number of large crossings were witnessed in a number of large cap counters including Commercial Bank (Voting), Distilleries Company of Sri Lanka & Aitken Spence.

Top contributors towards the week’s turnover included a number of large cap counters including Commercial Bank (Voting), Distilleries Company of Sri Lanka, John Keells Holdings & Hatton National Bank whilst a slight improvement in retail participation was witnessed during the week with counters such as Panasian Power, Seylan Merchant Bank & Richard Pieris being actively traded.

Dialog Axiata, Softlogic Holdings, Commercial Bank (Voting), Panasian Power and Seylan Merchant Bank topped the list in terms of volume traded during the week. The average daily turnover for the week was LKR1,050.7 mn whilst the average daily volume was 32.6mn shares.

Significant foreign investor interest was observed over the week with foreign purchases amounting to LKR1,986.7 mn, whilst foreign sales amounted to LKR1,685.5 mn. Market capitalisation stood at LKR2,257 bn, and the YTD performance is 4.1%.

Conclusion:

The bourse rises in value witnessing strong participation by investors across the board…….

The bourse made a fresh move this week with both the indices surging up to make gains, whilst recording commendable average daily turnover. The bourse gained 129.28 points for the week with the total market value rising by LKR48.2bn. Many counters including blue chip counters encountered several crossings with institutional and foreign interest being centered, whilst retail hunting continued on retail favourite counters. Downward trend in Treasury yields coupled with the upward revision in the country’s GDP forecast by the World Bank, would have presumably uplifted the investors’ sentiments. Whilst John

Keells Holdings remained as a hot pick of foreign investors, many other counters such as Distilleries, Lanka Milk Foods, Softlogic Holdings, and Lion Brewery also witnessed heightened foreign interest, bringing the YTD net foreign inflow to LKR481.1mn. The significant foreign inflows to the country through the equity market and the treasury market modes have strengthened the rupee against the dollar; where the LKR appreciated by 6% since 2H2012 to present.

During the week, The World Bank revised upward Sri Lanka’s GDP forecast for 2013 from 6.1 percent to 6.8 percent, but the estimate is still below the Central Bank’s estimate of 7.5 percent. Nevertheless, it stated that considering the country’s structural improvements, the future prospects of the country remains stronger than the regional peers. According to the World Bank, the developing countries so far managed to remain relatively resilient amidst the gloomy global environment. Hence, developing

countries have been given more attentions over rising the growth potential of their economies since these countries are expected to drive the future global economy growth.

Source: Asia Capital