Blue chip index dip tops 10%

The decline of Milaka Price Index (MPI) widely reflective of blue chip and active stocks surpassed the 10% threshold this week as a more credible recovery continued to be elusive for the Colombo Bourse.

The MPI dipped by 1.47% to finish the week at 6,344 points, reflecting a year-to-date decline of 10.15%. Last week the year-to-date dip was 8.81%. When compared with MPI’s 2011-peak level of 7,327 points, this week’s closing reflects a dip of 13.4%.

The deteriorating performance of MPI is as against 3.15% year-to-date growth in All Share Index (ASI). However the latter confirms the downward volatility of the benchmark index as well when compared with 2011 peak of 17.7% year-to-date gain by mid-February.

In June alone ASI had shed 7.6% mainly due to forced selling, in line with the policy of the regulator Securities and Exchange Commission (SEC) to recover credits, aiming to eliminate all credit dealing by end 2011.

MPI comprises some of the best blue chips and active stocks prompting most analysts to showcase it as a better barometer to gauge the true investor sentiment. But overall MPI has been on a continuous struggle further dampening investor sentiment as well as a more credible recovery in the Bourse.

The only redeemer this week was a higher turnover Rs. 10.45 billion as opposed to Rs. 8.88 billion in the previous week which could be partly due to forced selling and return of bargain hunters in tandem with bearish conditions. The active play by select state funds such as EPF which dominated the buying side this week was another factor.

NDB Stockbrokers commenting on yesterday’s performance of the market said “Both retailers and institutions were active traders at the beginning of a new quarter with ASPI and MPI gaining 19 and 43 points respectively.”

“Due to the burden of debtors which resulted in forced selling, the overall weekly performance was negative ASPI and MPI fell by 0.69% and 1.47% respectively,” it added.

Yesterday Bank, Finance and Insurance sector was the main contributor to the market turnover (due to Swarnamahal Financial Services and Nation Lanka), while the sector index increased by 0.26%. Swarnamahal Financial Services gained Rs 7.70 (10.85%) and closed at Rs.77.00, while Nation Lanka closed at Rs.24.50.

Trading sector also contributed significantly to the market turnover (due to Brown and Company). The sector index increased 0.26%.

Brown and Company was the main contributor to the market turnover while 599,000 shares exchanged hands at Rs.318.00. The share closed at Rs.314.50 with a loss of Rs.0.60 (0.19%).

                       Distilleries also contributed significantly to the market turnover with the share gaining Rs.0.30 (0.17%) to close at Rs.180.00. John Keells helped the MPI gain while the share price increased

Rs.3.80 (1.89%) and closed at Rs.205.00.

Acuity Stockbrokers in its weekly report said both indices continued on the downward trend seen through most of June with the ASPI losing 47.85 points to close at 6844.71 and the MPI losing 94.87 to close at 6344.43. ASPI contracted by 0.69% and the MPI by 1.47%.

The weekly turnover value recorded an increase of 17.7% to LKR 10.45 bn amounting to a daily average value of LKR 2.09 bn when compared with last week’s daily average turnover of LKR 1.77 bn. The number of shares traded declined by 36.4%, averaging 77.5 mn shares traded daily as against 121.9 mn traded last week. This week too, the Banking and Finance sector led the turnover in value as activity in finance counters was witnessed with the sector accounting for 23.5% of turnover in value amounting to LKR 2.45 bn, led by investor interest in Central Finance recording a turnover value of LKR 873.16 mn representing 8.4% of the market turnover. The manufacturing sector was the second highest contributor to turnover; accounting for 12.71% amounting to 1.33 bn. Third highest on the turnover value list was the Investment Trust sector with 11.76% or LKR 1.23 bn.

Volume of turnover for the week was dominated by Banking and Finance sector with 122.3 mn shares being traded or 31.58% of volume of turnover, followed by the manufacturing sector which represented 19.66% of turnover volume as 76.2 mn shares traded. Third highest contributor to turnover volume was the Power and Energy sector, which accounted for 11.16% or 43.2 mn shares. Market Capitalisation was at LKR 2,358.87 bn.

Four counters generated 28.3% of the week’s total turnover value namely; Central Finance, Aitken Spence, Distilleries and Environmental Resources.

Abans Financial and AMF Co. Ltd. which commenced trading this week through introductions, were the major price gainers; Abans financial closed the week at 66.50 (from 9.50) and AMF Co Ltd closed at 200.00 (from 135.00). Lanka Ashok was also a major price gainer, recording a 44.3% increase against last week’s price of LKR 4,100. Swarnamahal Finance and Finlays Colombo recorded gains of 39% and 33% respectively.

Union Assurance declined significantly over the week, decreasing 49.8% to close at LKR.108.7. AHOT Properties was another loser, dipping 49.5% against last week’s closing price of LKR 178.1 to close at LKR 89.90. Paragon declined 41.82% over the week to LKR 1,600. Harischandra and JKH fell 36.6% and 27.5% respectively.

Foreigners remained net sellers closing the week with a net sales position of LKR 1.01 bn. Foreign purchases totalled to LKR 349.4 mn recording a 44.3% decline from last week’s total of LKR 501.7 mn. Foreign selling for the week amounted to LKR 1.36 mn an increase of 34.5% compared to last week.

SMB Leasing topped the volume list recording 37.1 mn shares changing hands representing 9.6% of the aggregate share volume. Amana contributed 9.0% of aggregate share volume with 34.9 mn shares changing hands.