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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Bourse down, benchmark interest rate rise dampens investor confidence

Bourse down, benchmark interest rate rise dampens investor confidence

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The week concluded with firm interest on blue chips with both indices dipping marginally week on week. The All Share Price Index lost 33.2 points to close at 5,735.7 points (-0.6% WoW), while the S&P SL20 index fell 19.1 points to close at 3,293.6 points (-0.6% WoW). The ASI fell mainly on the back of the losses made by Ceylon Tobacco (-2.1% WoW), Bukit Darah (-2.0% WoW), Sampath Bank (-2.6% WoW), Carsons Cumberbatch (-1.1% WoW) and Peoples Leasing & Finance (- 4.4% WoW).

The dip in both indexes during the week can also be attributed to the shift in investor interest from counters with moderate growth prospects towards fundamentally strong blue chip stocks with higher growth prospects. It is notable that Banking and Diversified sectors have emerged as the key growth drivers of the Colombo bourse marked by foreign as well as local interest on key counters such as John Keels Holdings, Commercial Bank, Hatton National Bank and National Development Bank. The relatively higher interest on fundamentally strong counters by both retail and high net worth participants indicates a general change in the level of risk appetite within the market. This demonstrates a shift of investor interest towards low risk and fundamentally strong growth stocks that may serve the purpose of a safe haven investment at a time where the overall direction of the economy is being reassessed by market forces. We are of the view that these significant changes in market behaviour indicates that the Stock Exchange is maturing in terms of its level of responsiveness to general economic conditions.

Commercial Bank backed by both large scale and retail investors emerged as the main contributor to the turnover during the week adding circa 20% to the total turnover. Further, Sampath Bank, John Keels Holdings and National Development Bank together contributed circa 40% to the weekly turnover demonstrating the major involvement by selected large cap counters in raising turnover levels in the Colombo Bourse.

Meanwhile, Bank, Finance & Insurance sector counters attracted heavy investor interest during the week with sector contributing circa 53% to the weekly turnover. On the other hand, Diversified sector driven by the crossings pertaining to John Keels Holdings chipped in with a 16% contribution to the total weekly turnover. Hence Bank, Finance & Insurance sector and Diversified Sector led the investments spree during the week with a cumulative contribution of circa 70% to the total turnover.

Top contributors to the weekly volume were Asia Siyaka Commodities, Commercial Leasing & Finance, PC House, Commercial Bank and Expo Lanka Holdings .The average daily turnover for the week was LKR 1,110.3 mn up 57.5%WoW whilst the average daily volume was 66.3 mn shares.

Significant foreign investor interest was observed over the week with foreign purchases amounting to LKR 1,204.2 mn, whilst foreign sales amounted to LKR 728.1 mn. Market capitalisation stood at LKR 2,205.1 bn, and the YTD performance is 1.6%.

Institutional and foreign participation keeps the bourse alive, whilst retailers remain in the side line

The short week’s trading activities at the Colombo bourse were primarily on a sluggish mode after witnessing a positive momentum during last week. The bench mark index traded within a very narrow range, to wrap up the week in red. Retailers were largely adopting a “wait and see” approach whilst institutional and foreign participation held up the bourse’s performance. John Keells Holdings continued to be the favourite pick of the foreign investors, whilst country’s leading banks too grabbed the attention of high net worth, institutional and foreign investors.

Even though the market activities were lethargic during the week presumably due to the holiday mood creeping in and the increasing treasury yields, foreign activity continued to dominate the market with a weekly net foreign inflow of LKR476mn. It’s noteworthy to mention that the primary reason behind this is that the Colombo bourse continues to remain as an attractive frontier market whilst selected blue chip companies future prospectus remains promising. Further it is noteworthy to mention that Sri Lankan corporate listed debt market has shown signs of revival following the concessions provided for corporate bond investments through 2013 budget proposals. Several Banking, Finance & Insurance sector giants have already taken advantage of this new development while recently Lion Brewery and Softlogic Holdings have revealed their plans to raise LKR3bn and LKR750mn respectively through debenture issues. This would enable firms to borrow at a rate of interest relatively below the AWLR and more closer to AWFDR depending on the credit rating, allowing firms to realign their attention towards long term investments and hence further optimizing the resource allocation of the corporate sector.


2Bourse down, benchmark interest rate rise dampens investor confidence Empty The Bourse Weekly Performance Sun Mar 31, 2013 1:41 am


Global Moderator
Bourse down, benchmark interest rate rise dampens investor confidence Z_p-5210


Global Moderator
Stock Market Review for the week ending 28th March 2013:

During the week the ASI lost 32 points to close at 5,736 and the S&P SL20 lost 27 points to close at 3,294. The daily average turnover for the holiday shortened week was Rs. 616Mn. The week also recorded a foreign inflow of Rs, 1.1Bn against an ouflow of Rs. 811Mn leading to a net foreign inflow of Rs. 291Mn. Market ended on a flat note during this three-day week while the yields on T-bills rose for the fourth straight week at Monday’s auction even though the Central Bank had kept its policy rates unchanged for the third month in a row, prompting a slight lull in investor confidence.

The market started off trading for the holiday shortened week with both the ASI and S&P SL20 closing lower by 23 and 17 points respectively as profit taking brought down the indices. A low turnover of Rs. 353Mn was recorded boosted by two significant deals taking place in Sampath Bank and Commercial Bank. The top traded counters for the day were Sampath Bank with Rs. 76Mn, Asian Hotels and Properties with Rs. 53Mn and NDB with Rs. 43Mn. The share price of Sampath Bank lost Rs. 1.00 to close at Rs. 231.00 while Asian Hotels and Properties lost Rs. 0.50 to close at Rs. 69.50. Meanwhile NDB gained Rs. 0.30 to close at Rs. 162.10. Foreign buying was witnessed in Sampath Bank and HNB leading up to a net inflow of Rs. 102Mn.

The market resumed trading on Wednesday, with the indices closing marginally lower with gains in JKH and NDB minimizing the losses on the indices. The ASI closed lower by 0.6 points while the S&P SL20 lost 4 points. An improved turnover of Rs. 938Mn was recorded with several crossings in John Keells Holdings, NDB, Aitken Spence and Sampath assisting in increasing turnover levels. The top contributors to turnover were, JKH with Rs. 335Mn, NDB with Rs. 174Mn and Aitken Spence with Rs. 53Mn. The share price of JKH gained Rs. 0.80 to close at Rs, 246.80 while NDB gained Rs. 2.90 to close at Rs. 165.00. Aitken Spence too closed Rs. 0.50 higher at Rs. 119.50. Foreign buying was evident in JKH and NDB while selling was witnessed in Aitken Spence leading to a net inflow of Rs. 408Mn.

On the final day of trading for the week in lieu of Good Friday, the market closed on a negative note with the ASI losing 9 points and the S&P SL20 losing 6 points. A turnover of Rs. 2Bn was recorded with Institutional activity in Commercial Bank, Asia Siyaka and Commercial Leasing Company elevating turnover levels. The top contributors list was headed by Commercial Bank with Rs. 614Mn followed by Sampath Bank with Rs. 358Mn, Asia Siyaka with Rs. 278Mn. The share price of Commercial Bank gained Rs 0.50 to close at Rs. 113.00 while Sampath Bank lost Rs. 4.20 to close at Rs. 224.90. Asia Siyaka closed flat at Rs. 2.80. A net outflow of Rs. 39Mn was recorded for the day.

(Courtesy: Innovest Investments (Pvt) Ltd – an Investment Management Company licensed by the Securities & Exchange Commission of Sri Lanka)


Director - Equity Analytics
Director - Equity Analytics
Markets declined over the holiday-shortened week with the ASPI losing 0.58% (or 33.20 points) W-o-W to close at 5735.68 points and the S&P SL 20 Index falling 19.14 points to close at 3293.57 points (also a 0.58% decline from last week's close). Significant interest in Commercial Bank made the counter the largest contributor to this week's total turnover value.

The counter accounted for 20.10% of the market's total turnover as it contributed LKR 669.38mn over the week. Sampath Bank made a contribution of LKR 477.68mn, to represent 14.34% of total market turnover value. JKH meanwhile, accounted for 13.25% (or LKR 441.47mn) of the week's total turnover value.

Weekly turnover value consequently amounted to LKR 3.33bn, a dip (-5.52%) nonetheless from last week's turnover value of LKR 3.53bn. Daily average turnover value for the week amounted to LKR 1.11bn relative to LKR 705.14mn a week ago. Market capitalization meanwhile recorded a 0.58% W-o-W decline to LKR 2205.05bn compared to last week's market capitalization of LKR 2217.81bn.

The Banking and Finance sector was the highest contributor to the week's total turnover value, accounting for 58.14% (or LKR 1.94bn) of the market; Commercial Bank and Sampath Bank accounted for a significant portion (59.23%)of the sector's total contribution. The second highest contributor to total market turnover stemmed from the Diversified sector which contributed 18.65% (or LKR 621.26mn).

This was followed by the Services sector which accounted for 8.43% (or LKR 280.82mn) of the week's total turnover. The Diversified sector was helped primarily by JKH which accounted for 71.06% to the sector's total turnover value.

The Services sector dominated the market in terms of share volume, accounting for 50.25% (or 99.89mn shares) of the week's total share volume. The Banking and Finance sector followed as 46.79mn shares (or 23.54% of total share volume) were traded. The Diversified sector meanwhile, contributed 9.51% to the week's total turnover volume, representing 18.91mn shares. The highest price gainer for the week was Serendib Engineering Group with a W-o-W gain of 31.74%. The share closed at LKR 204.20 compared to the last week's close of LKR 155.00. SMB Leasing gained 28.57% over the week to close at LKR 0.90 while Miramar Beach Hotel gained 22.47% during the week to close at LKR 89.40.

Hapugastenna Plantations and Ceylon Beverage Holdings were also amongst the week's top price gainers. Despite only three shares trading over the week, Selinsing Plc was the highest price loser this week, declining 16.27% W-o-W to close at LKR 1000.10. Ceylon Hospitals Plc (NV) recorded a W-o-W price decline of 15.05% to close at LKR 75.10 while Beruwela Walkinn closed at LKR 52.20, representing a 12.85% decline.

Foreign investors recorded a net buying position of LKR 0.48bn, a 29.91% W-o-W decline from last week's net buying position of LKR 0.68bn.

Daily average net inflows however recorded a 16.82% increase, rising to LKR 0.16bn from LKR 0.14bn recorded last week. Total foreign purchases amounted to LKR 1.20bn relative to LKR 1.40bn last week (14.28% W-o-W decline) while total foreign sales increased a marginal 0.34% W-o-W to LKR 0.73bn. In terms of volume, National Development Bank and JKH led foreign purchases, while Commercial Bank and Tokyo Cement led foreign sales. In terms of value too JKH and National Development Bank led foreign purchases, while Commercial Bank and Aitken Spence led foreign sales.

Markets lost some momentum from last week's late rally, declining 33 points from last Friday to close at 5735.68. Turnover levels however, hit a 14-day high, reaching LKR2.0bn on Friday with approx. 50% of this generated through crossings. Significant crossings in Commercial Bank (LKR 568.0mn), Asia Siyaka (LKR 278mn) and slightly smaller off-market transactions in CLC, JKH, NDB and Tokyo Cement helped boost the week's overall turnover. Average daily turnover levels for the week were consequently higher (LKR 1.1bn) helping maintain the Y-T-D daily average of LKR1.0bn. Meanwhile, foreign inflows to the CSE continued unabated with net inflows for the three day week totaling LKR 476.0mn relative to last week's 5-day total of LKR 679.1mn. Solid interest in Banking and blue-chip counters are likely to remain next week.

Point of View
T-bill rates continued their upward momentum, rising for the 4th consecutive week since the policy rate cut in December. Weighted average yields across the 3-month and 12-Month maturities rose by 4 and 9 bps respectively over the week while bids for 6-month t-bills were rejected for the 1st time in over a year. Money market liquidity however continued to be strong, with surplus liquidity increasing to LKR 30.8bn relative to last week's 2-month low of LKR 19.9bn.


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
. "We are of the view that these significant changes in market behavior
indicates that the Stock Exchange is maturing in terms of its level of
responsiveness to general economic conditions."

I agree with the above statement mentioned in the ASIA wealth MANAGEMENT REPORT

It is very clear thet we can see big improvement in the maker behavior of
all participant of stock Market during last 3-4 monthsThis is a good indication about the future
of stock market in Sri Lanka

If govt interference can be minimized market behavior wiil imprve further

Last edited by D.G.Dayaratne on Mon Apr 01, 2013 9:39 pm; edited 1 time in total (Reason for editing : to add more)

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