The bourse erased early gains and edged lower on Friday and closed the weekly operations on a negative note. All Share Index closed on nearly four week low of 7,276.63 by shedding 52.96 index points or 0.72% while 20-scrip S&P SL20 index declined by 28.93 index points (-0.70%) to end at 4,078.89.

Policy uncertainties, impending change in SEC chairman, potential probe on corruption and irregularities at CSE, EPF and looming signs of increasing interest rates are weighing on the investor sentiment and the equities lost 329 points or 4.3% post-election driving the year-to-date return to negative territory (-0.3%).

The coming week would be eventful as the first monetary policy review under the new government will be released on 27th Jan (Tuesday) while the ‘mini budget’ of the new government, covering four months of spending to April will be presented to the parliament on 29th Jan (Thursday). These may remove some of the uncertainties and may provide guidance especially in terms of the new administration’s policy framework.

During today’s session the price declines in counter such as Carson Cumberbatch (closed at LKR 400.00, -4.8%), John Keells Holdings (closed at LKR 223.00, -1.4%) & Bukit Darah (closed at LKR 700.00, -4.1%) dragged index performance to negative zone.

Daily market turnover reached LKR 987mn supported by several crossings recorded in Dialog Axiata (3.3mn shares at LKR 13.60), Distilleries (1.0mn shares at LKR 235.00) and John Keells Holdings (0.6mn shares at LKR 223.00). Aggregate value of crossings represented 41% of the total turnover.

Distilleries emerged as the top contributor the turnover with LKR 362mn followed by John Keells Holdings (LKR 204mn) & Dialog Axiata (LKR 48mn).

Out of 240 counters, 117 slipped, 73 advanced while 50 counters remained unvaried. Cash map sharply declined to 28% from 50%. 10 counters touched 52wk low price levels.

Palm Garden Hotel rights were the most favored counter of the session. Further Lanka IOC, Access Engineering and John Keells Holdings were among heavily traded stocks.

Foreign investors were net sellers with net outflow of LKR 518mn. Foreign participation was 37%. Net foreign outflows were seen in counters such as Distilleries (LKR 337mn), John Keells Holdings (LKR 199mn) and Lanka IOC (LKR 8mn) while net foreign inflow was mainly seen in Dialog Axiata (LKR 47mn).

Meanwhile NDB Capital Holdings announced that the company will be delisted with effect from 26th January 2015. Further Pradeshiya Sanwardana Bank debenture issue which was opened last week has got oversubscribed and issue would be closed today.

During the week the All Share index shed 237.23 points or 3.16% while S&P SL 20 index decreased by 169.14 index points or 3.98%. Subsequent to the index depreciation, the Market PE has declined to 14.2x from 14.8x. John Keells Holdings positioned at the top of the contribution list of the weekly turnover with LKR 606mn followed by Distilleries (LKR 413mn) and Commercial Bank (LKR 341mn). Ceylinco Insurance & Lanka Ceramic were among the top gainers of the week while Access Engineering, Softlogic Holdings & Ascot Holdings were among the top losers of the week.

For the week, foreign investors were net sellers with a net outflow of LKR 304mn. Weekly net foreign participation was at 22%. Weekly net foreign outflows were seen in Distilleries (LKR 339mn), John Keells Holdings (LKR 192mn) whereas net foreign inflow was mainly seen in Hatton National Bank (LKR 148mn). Meanwhile year-to-date foreign outflow increased to LKR 779mn.

Meanwhile 12 month T-bill yield increased by 1bp to 6.05% in this week’s primary T-bill auction while both 6 month and 3 month T-bill yields also increased by 1bp each to 5.90% and 5.80% respectively. The rupee remained under pressure during the week as the dollar closed the week up at LKR 134.25 its’ highest since September 2013. According to the external sector performance report for November 2014, exports during the month declined by 10.7% to USD 921mn while imports increased by 4.8% to USD 1.6bn. Accordingly, the trade balance further widen by 6.6% to USD 7.5bn during the first 11 months of 2014.

Lanka Securities Research