Colombo stock market indices stretched the gains on Friday, as investors’ sentiment remained bullish. The Benchmark All Share Price index gained 18.08 points or 0.25% to end at 7,332.05 while S&P SL 20 index gained 13.99 points (+0.34%) to end at 4,119.07.

The market ended the month of July with positive returns where the main index advanced by 311.25 points or 4.4% while S&P SL 20 index gained 199.94 points or 5.1% during the month.

Ceylon Cold Stores (CCS) was the main contributor to the index performance in today’s session, subsequent to the 84%YoY growth in earnings in the June quarter. The counter advanced to a fresh 52wk high price of LKR 425.00, +19.4% while recording a turnover of LKR 47mn and it positioned among the top 5 contributors to the market turnover. Further Ceylon Tobacco (closed at LKR 955.00, +1.4%), Hemas Holdings (closed at LKR 88.10, +1.3%) and Carson Cumberbatch (closed at LKR 405.00, +2.4%) also affected favorably to the market performance.

High net worth and institutional investors were active today and bulk deals were seen Commercial Bank (1.7mn shares at a price range of LKR 170.00-171.00), John Keells Holdings (1.4mn shares at a price range of LKR 196.50-197.00 per share), Dialog Axiata (15.3mn shares at LKR 11.00 per share) and Lanka Orix Finance (33mn shares at LKR 4.20 per share). Total crossings represented 48% of the market turnover.

Further, John Keells Holdings emerged as the top contributor to the market turnover with LKR 360mn followed by Commercial Bank (LKR 330mn), Dialog Axiata (LKR 197mn) and Lanka Orix Finance (LKR 140mn). In addition, the market liquidity improved to record a nearly one month high of 84mn shares.

Market breadth was relatively neutral with 105 stocks rising, 100 stocks declining while 56 counters remained unchanged. Cash map marginally declined to 53% from 55%. 17 counters advanced to 52wk high prices while only Ceylon Leather Products Warrant 14 declined to a 52wk low price of LKR 0.10.

Nations Trust Bank released their interim financial report for the June quarter today with a notable profit growth of 26%YoY. Despite the earnings growth, the counter declined to LKR 105.50, -1% during the session.

Poultry sector counters extended the gains where Bairaha Farms (LKR 141.50), Ceylon Grain Elevator (LKR 65.90) and Three Acre Farms (LKR 83.00) moved to fresh 52wk high prices.

Dankotuwa porcelain was heavily traded subsequent to the announcement of a right issue. The proportion of the right issue is five for four at LKR 8.00 per share. The counter declined to LKR 11.80 today, but recovered to close at LKR 12.00, -17%. Meanwhile John Keells Holdings warrant 0022 & 0023, Ceylon Grain Elevators and Access Engineering were among mostly traded counters.

Meanwhile several counters declared dividends during the trading session. Arpico Finance and Samson International declared first & final dividends of LKR 3.75 and LKR 2.00 per share respectively while Vidullanka declared an interim dividend of LKR 0.125 per share.

Foreign investors off-loaded LKR 445mn worth of shares in today’s session. Foreign participation was LKR 32%. Subsequent to today’s net foreign outflow, year-to-date net foreign inflow declined to LKR 956mn. Net foreign outflows were seen in Commercial Bank (LKR 254mn), John Keells Holdings (LKR 123mn) and Distilleries (LKR 19mn) while net foreign outflow was seen in Lanka Tile (LKR 6mn).

During the week the main index advanced by 63.00 points or 0.87% while S&P SL 20 index inclined by 36.32 points or 0.89% supported by the positive corporate earnings and price advancements in blue chips. The active investor participation was witnessed during the week where average daily market turnover for the week crossed LKR 1bn mark to record LKR 1.9bn. Ceylinco Insurance topped the weekly turnover list with LKR 1.9bn followed by John Keells Holdings (LKR 1bn) and Commercial Bank (LKR 364mn). Following the advancement in the index, market PE marginally inclined to 14.0x from 13.9x.

Keells Food Products (+15%), Ceylon Grain Elevators (+12%) and Ceylon Cold Stores (+11%) were among top gainers for the week whilst Dankotuwa Porcelain (-18%), Alumex (-6%) and Swisstek (Ceylon) (-5%) were among top losers for the week.

Foreign investors were net buyers for the week with a net foreign inflow of LKR 1.4bn. Foreign participation was 31%. Net foreign inflows were seen in Ceylinco Insurance (LKR 1.9bn), Lanka Century Investment (LKR 61mn) and Distilleries (LKR 59mn) while net foreign outflows were seen in John Keells Holdings (LKR 306mn), Commercial Bank (LKR 254mn) and Aitken Spence (LKR 134mn).

During the month of July the market witnessed net foreign outflow of LKR 835mn (LKR 2.7bn outflow in June). Foreign participation was relatively higher at 36% compared to 28% recorded in June.

In government debt markets, treasury yields inclined for fifth consecutive session. 3 month and 6 month yields inclined by 3bps and 5bps to 6.28% and 6.43% while 12m yield inclined by 9bps to 6.48%. Central Bank offered LKR 19bn worth of T-bills which was oversubscribed by 3.1x. It was decided to accept LKR 26.5bn.

According to the data released by Department of census and statistics, the annual average inflation rate further dropped to 1.3% from 1.7% in July. The year-on-year change is -0.2%.

Market will be closed tomorrow (31st July 2015) due to Poya Holiday.

Lanka Securities Research