The Bourse Weekly Performance (Week- ended 25th of July 2014)

The Bourse Weekly Performance (Week- ended 25th of July 2014)

	Week-ended 25th July 2014	Week-ended 18th July 2014
All Share Price Index	6,783.64	6,722.20
S&P SL20 Index	3,764.90	3,738.98
Total Turnover for the week (LKR)	5,537,452,651	6,225,177,337
Total Net Foreign Inflow/ (Outflow) (LKR)	576,319,440	628,442,731
Market Capitalization	2,842,893,517,300	2,817,103,689,651
Market PER	18.30	18.11
Market PBV	2.13	2.15

The Colombo bourse regained moderate momentum during the week with the ASPI rising by 0.91% closing at 6,783.64. The secondary S&P SL 20 index gained by 0.69% to close the week at 3,764.90. Consolidated turnover however declined falling by 11% WoW to LKR 5.5 Bn. Gainer’s outpaced losers with CFT, REXP and WAPO rising by 32%, 26% and 24% and offsetting losses in PCHH, GOOD and ASHA which declined by 24%, 14 % and 10% respectively. Foreign investors’ sentiment continued to be bullish during this week as well, with total buying of LKR 1,480.89 Mn, outpacing the total foreign selling of LKR 904.57 Mn. Hence the week observed a net foreign inflow of LKR 576.32Mn. With this the YTD net foreign inflow to the market topped to LKR 10.84 Bn.The total market capitalization appreciated by LKR 25.78Bn(Approximately 0.92 %) over the week to close at LKR 2.84Tn.

The ASPI is up by 6.4% on a MTD basis, and we expect it to continue to trend upwards over the next couple of weeks with the release of 1Q2015/2Q2014 corporate results providing the necessary tailwind. While we are encouraged by its performance so far, we believe that attempting to seek quality on the bourse going forward however will be the effort of a careful bottom up stock selection process. While high-quality stocks on the bourse may always be welcomed for risk management, for those investors with a medium to longer term investment horizon, these counters present strong fundamental value. Should the market falter, their robust balance sheets and steady earnings will provide a strong defence, conversely, should the market rise their strong competitive positions should allow them to outperform. We advise investors to take advantage of any price weakness in the market and focus on quality stocks with a strong business model and sustainable topline and bottomline growth.

The Bourse Weekly Performance (Week-ended18thof July 2014)

The Bourse Weekly Performance (Week-ended18^thof July 2014)

	Week-ended 18th July 2014	Week-ended 11th July 2014
All Share Price Index	6,722.20	6,661.40
S&P SL20 Index	3,738.98	3,708.16
Total Turnover for the week (LKR)	6,225,177,337	10,004,408,207
Total Net Foreign Inflow/ (Outflow) (LKR)	628,442,731	294,481,928
Market Capitalization	2,817,103,689,651	2,791,594,657,555
Market PER	18.11	17.95
Market PBV	2.15	2.13

Following a week of healthy momentum, the bourse closed virtually unchanged at 6,722.20 on Friday. Consolidated turnover declined by 38% WoW to Rs. 6.2 Bn. Gainers modestly outpaced losers with PCP, ARPI and AMF rising by 28%, 27% and 28% and offsetting losses in PARA, SIRA and HEXP which declined by 19%, 14% and 13% respectively. Meanwhile, global equities experienced a moderate sell off following news of a downed Malaysian airlines jet at the Ukraine-Russia border which sent investors into defensive assets.

The bourse’s performance over the last fortnight has been highly inspiring, and we expect the market to regain momentum next week, however characterized by a series of rallies and pullbacks. Given that the equity market has a notorious tendency to rush from one side to another in response to the ebb and flow of optimism or pessimism, we recommend investors to make a directional call, build a quality portfolio and take advantage of what is increasingly becoming a ‘stockpickers’ market. Investors are consequently advised to build a portfolio of high quality cash rich companies with strong balance sheets that have underperformed and which have the upside potential to re-rate to their intrinsic values.                 

The Bourse Weekly Performance (Week-ended11thof July 2014)

The Bourse Weekly Performance (Week-ended11^thof July 2014)

	Week-ended 11th July 2014	Week-ended 04th July 2014
All Share Price Index	6,661.40	6,477.51
S&P SL20 Index	3,708.16	3,610.68
Total Turnover for the week (LKR)	10,004,408,207	11,492,509,528
Total Net Foreign Inflow/ (Outflow) (LKR)	294,481,928	3,028,495,430
Market Capitalization	2,791,594,657,555	2,714,513,087,185
Market PER	17.95	17.45
Market PBV	2.13	2.07

The Sri Lanka equity market broadly represented by the ASPI index is entering a vibrant new bullish phase. The main index exceeded 6,500levels whilst recording excellent levels of daily turnovers with weekly average turnover surpassing LKR 2 Bn. TheAll Share Price Index gained 183.89 points (2.84%) over the week to close at 6,661.40 while the secondary S&P SL 20 index gained 97.48 points (2.70%) to close at 3,708.16 points. The total market capitalization appreciated by LKR 77.1Bn to close the week at LKR 2.79 Tn. The foreigninvestor sentiment was moderate during this week as well, with the total foreign buying of LKR 2.15Bn, outpacing total selling of LKR 1.86Bn. Hence the week observed a net foreign inflow of LKR 294.48Bn. With this the YTD net foreign inflow to the market climbed to LKR 9.64Bn.             

A total of 554.51Mnshares were seen changing hands to record a total weekly turnover of LKR 10.00Bnwhich is a dip 12.97% over its previous week’s figure. The week’s ASPI movement was heavily influenced by the stocks of JKH, SLTL and LION. The market PER increased to 17.95x by end of this week whereas the most stagnated PBV jumped to 2.13x.

While we are definitely motivated by the robust performance of the market, with the 1Q2015/2Q2014 corporate results in the offing, we believe that it may be highly important to determine the source of profits, whether a result of actual top line growth or an increase in other income or a significant cut in costs (that may have a negative impact on future productivity). While the equity market has a notorious tendency to rush from one side to another in response to the ebb and flow of optimism or pessimism, we recommend investors to make a directional call, build a quality portfolio of stocks that will generate consistent returns in the medium to longer term.