Volatility returns to the stock market

May, 29, 2015

Volatility returned to the market on Friday to wrap the weekly activities on a negative note. Benchmark All Share Price index lost 35.42 points or 0.49% to end at 7,220.29 while S&P SL index lost 34.38 points (-0.85%) to end at 4,000.66.

Today’s losses were mainly driven by price declines in primary blue chip counters such as Ceylon Tobacco (closed at LKR 950.00, -4.3%), Lion Brewery (closed at LKR 645.00, -7.2%) and Dialog Axiata (closed at LKR 11.60, -0.9%).

Daily market turnover was LKR 1.3bn. Several crossings were recorded in large cap banking sector counters such as Hatton National Bank (0.1mn shares at LKR 228.00 per share), Commercial Bank (0.5mn shares at LKR 164.00 per share) and National Development Bank (0.1mn shares at LKR 275.00 per share). Total crossings represented 10% of the market turnover.

Further Commercial Bank positioned at the top of the turnover list with 152mn followed by John Keells Holdings (LKR 132mn), National Development Bank (LKR 70mn) and Hatton National Bank (LKR 65mn).

Losers outweighed the gainers 99 to 96 while 56 counters remained unvaried. Cash map improves to 55% from 38%. 10 counters touched 52wk high prices while 13 counters declined to 52wk low prices.

Shares of Alufab, Brown & Company, John Keells Holdings and Grain Elevators were among heavily traded counters for the session. John Keells Holdings dropped to a 52wk low price of LKR 194.90, -2.6%, but closed at LKR 195.00, -2.5%.

Reflecting the favorable interim financial results, United Motors advanced today to LKR 107.90, +2.8%. United Motors recorded a significant profit growth of 187% to LKR 539mn in the 4QFY15.

In addition Central industries recorded a 52wk high price of LKR 99.50, +2.7% reacting to the positive earnings growth of 26%YoY. However the counter failed to maintain the momentum throughout the session and closed lower at LKR 96.00, -0.9%. Meanwhile several industrial sector counters such as Lanka Walltiles (+1.5%), Sierra Cables (+2.3%), Piramal Glass (+1.6%) and Royal Ceramic (+0.4%) advanced during the session.

Out of 287 listed companies, 147 counters have released their March quarter earnings so far. Subsequent to the released quarter results the earnings have grown by 10.3%YoY compared to the comparative quarter results.

Foreign investors continued to be net sellers for the fourth consecutive session with a net outflow of LKR 188mn. Foreign participation increased to 36%. Net foreign outflows were mainly seen in Commercial Bank (LKR 129mn), John Keells Holdings (LKR 82mn) and National Development Bank (LKR 39mn) while top net inflow was seen in Hatton National Bank (LKR 32mn).

Several counters such as Central Industries (Final Dividend of LKR 4.50 per share), Trans Asia Hotels (Final Dividend of LKR 2.00 per share), Tea Smallholder Factories (Final Dividend of LKR 0.50 per share), Asian Hotels and Properties (Final Dividend of LKR 3.00 per share), John Keells Limited (First & Final Dividend of LKR 3.75 per share) & Horana Plantations (First & Final Dividend of LKR 0.50 per share) declared dividends today.

During the week the main index shed 68.45 points or -0.94% while S&P SL 20 index declined by 66.48 points or -1.63%. Commercial Bank topped the weekly turnover list with LKR 1.3bn followed by John Keells Holdings (LKR 339mn) and Hatton National Bank (LKR 310mn). Following to the index decline, market PE dropped to 13.6x from 13.8x.

Peoples Merchant Finance, FLC Hydro Power and Asian Alliance Insurance were among top gainers for the week whilst Agstar non-voting, Entrust Securities and MTD Walkers were among top losers for the week.

Foreign investors were net sellers for the week with a net foreign outflow of LKR 1.4bn. Foreign participation was 25%. Net foreign outflows were seen in Commercial Bank (LKR 1.1bn), Hatton National Development Bank (LKR 226mn) and John Keells Holdings (LKR 142mn) while net foreign inflows were seen in Hatton National Bank (LKR 138mn), Commercial Credit & Finance (LKR 67mn) and Lanka Century Investments (LKR 38mn). Subsequent to the weekly outflows, year-to-date net foreign inflow declined to LKR 4.4bn from LKR 5.9bn recorded in last week.

The market concluded the month of May with mixed returns as ASI advanced by 41.29 points or +0.58% while S&P SL 20 index declined by 52.79 points or -1.3%. Foreign investors were net buyers for the month of May with a net foreign inflow of LKR 704mn, which is a growth of 15%MoM. Foreign participation was 26%.

Meanwhile at the Treasury bill auction, T-Bill yields further dropped where both 6M yield and 3M yield declined by 1bp to 6.18% and 6.07% respectively while 12M yield declined by 2bps to 6.29%.

According to the data released by Department of census and statistics, the annual average inflation rate further dropped to 1.9% from 2.1% in May. The year-on-year change is 0.2%. Further, rupee continued to depreciate during the week where rupee against the dollar crossed LKR 137.95 mark recording the highest in recent years.

Moreover Singer Sri Lanka and DFCC Vardhana Bank announced that debenture issues which were opened today were oversubscribed and the issues were closed today.

Lanka Securities Research

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