Friday, July 11, 2014

The Bourse Weekly Performance (Week-ended11thof July 2014)



The Bourse Weekly Performance (Week-ended11thof 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.
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