Colombo equities ended weekly operations with negative returns ahead of the mid-year monetary policy review. During the opening hours, main index increased to 7,035 mark but failed to maintain the momentum and touched 10 week low. All share index declined by 15.13 index points (-0.22%) to close at 7,016.20 while 20-scrip S&P SL index shed 12.47 index points or 0.32% to end at 3,900.59.

Price declines in high caps such as Dialog Axiata (closed at LKR 10.40, -2.8%), Ceylon Tobacco Company (closed at LKR 902.00, -0.9%) and John Keells Holdings (closed at LKR 204.00, -0.5%) affected index performance negatively.

Daily market turnover reached to LKR 861mn supported by several crossings in Commercial Bank (1.7mn shares at LKR 160.00-161.00), John Keells Holdings (0.5mn shares at LKR 200.00) and Distilleries (0.1mn shares at LKR 270.00). Aggregate value of crossings represented 45% of the total turnover.

Accordingly, Commercial Bank emerged as the top contributor to the turnover with LKR 267mn while Distilleries (LKR 214mn), John Keells Holdings (LKR 106mn) and National Development Bank (LKR 26mn) were next best contributors to the turnover.

Weak investor sentiment was reflected in today’s session where, out of 239 stocks, 97 slipped, 82 advanced while 60 stocks remained unchanged. Cash map declined to 29% from 34%. Meanwhile, 14 counters touched 52wk low price levels.

Investor interest centered around Nation Lanka Finance counter subsequent to the announcement of right issue. Company intends to issue approx. 502mn shares at LKR 1.00 per share in the proportion of two shares to one share held. In the opening hours counter reached LKR 3.50 and following the announcement counter declined to LKR 2.60 but closed higher at LKR 2.70 (-20.6%).

Vallibel Finance, Dialog Axiata, John Keells Holdings main share and warrant 0022 were among heavily traded counters. Dialog Axiata recorded a 52wk low price of LKR 10.30 and all three shares of John Keells Holdings witnessed negative returns during the day.

Moreover, Lanka Milk Foods declared a first and final dividend of LKR 1.25 per share and counter closed at LKR 157.00 (+1.3%).
Further, as per the announcement made, Browns Investments has purchased the balance 49% of the shareholding of Ajax Engineers (Pvt) Ltd for a consideration of LKR 100mn, thus converting it to a fully owned subsidiary of the company. Ajax Engineers (Pvt) Ltd is in the business of installing aluminum curtain walls, doors, windows and glass facades.

Foreign investors were net sellers for the second consecutive day with a net foreign outflow of LKR 460mn. Foreign participation was 48%. Net foreign outflows were seen in Commercial Bank (LKR 267mn), John Keells Holdings (LKR 87mn), Distilleries (LKR 49mn) while net foreign inflow was mainly seen in Commercial Credit & Finance (LKR 5mn).

During the week the main index shed 18.95 points or -0.27% while S&P SL 20 index declined by 5.69 points or 0.15%. John Keells Holdings topped the weekly turnover list with LKR 429mn followed by Commercial Bank (LKR 335mn) and Distilleries (LKR 322mn). Subsequent to the decline, market PE reduced to 13.4x from 13.5x while RSI (14-day) is at 32.0.

Anilana Hotels & Properties (+18%), FLC Hydro Power (+12%) and FLC Holdings (+7%) were among top gainers for the week whilst Nation Lanka Finance (-34%), Dialog Axiata (-5%), Regnis (Lanka) (-5%) were among top losers for the week.

Foreign investors were net sellers for the week with a net foreign outflow of LKR 668mn. Foreign participation was 29%. Net foreign outflows were seen in Commercial Bank (LKR 267mn), John Keells Holdings (LKR 94mn), Distilleries (LKR 86mn) while net foreign inflows were seen in Nestle Lanka (LKR 41mn), Laugfs Gas non-voting (LKR 28mn) and Three Acre Farms (LKR 20mn). Subsequent to the weekly outflows, year-to-date net foreign inflow declined to LKR 1.8bn.

Meanwhile at Treasury bill auction, yields of 3M, 6M and 12M remained unchanged at 6.08%, 6.18% and 6.28% respectively. CBSL offered LKR 22bn worth of Treasury bills and the auction was oversubscribed by 2.1 times with bids received amounting to LKR 47bn. It was decided to accept LKR 15bn.

Lanka Securities Research