The Bourse continued its upward momentum as the ASPI increased by 8.56 points (or +0.13%) to close at 6,621.47 points, while the S&P SL20 Index also increased by 25.91 points (or +0.67%) to close at 3,898.41 points.
Turnover and market capitalization
Commercial Bank was the highest contributor to the week’s turnover value, contributing LKR 1.53Bn or 29.20% of total turnover value.
JKH followed suit, accounting for 15.86% of turnover (value of LKR 0.83Bn) while Sampath Bank contributed LKR 0.64Bn to account for 12.14% of the week’s turnover.
Total turnover value amounted to LKR 5.25Bn (cf. last week’s value of LKR 4.17Bn), while daily average turnover value amounted to LKR 1.31Bn (+57.63% W-o-W) compared to last week’s average of LKR 0.83Bn.
Market capitalization meanwhile, increased by 0.13% W-o-W (or LKR 3.89Bn) to LKR 3,010.62Bn cf. LKR 3,006.73Bn last week.
Liquidity (in value terms)
The Banking, Finance & Insurance Sector was the highest contributor to the week’s total turnover value, accounting for 56.51% (or LKR 2.97Bn) of market turnover.
Sector turnover was driven primarily by Commercial Bank, Sampath Bank, Central Finance,HNB & Orient Finance which accounted for 89.78% of the sector’s total turnover.
The Diversified Sector meanwhile accounted for 20.01% (or LKR 1.05Bn) of the total turnover value with turnover driven primarily by JKH & Hemas Holdings which accounted for 88.31% of the sector turnover.
The Beverage, Food & Tobacco Sector was also amongst the top sectorial contributors, contributing 8.84% (or LKR 0.46Bn) to the market driven by Lion Brewery Stores which accounted for 91.49% of the sector turnover.
Liquidity (in volume terms)
The Banking, Finance & Insurance sector dominated the market in terms of share volume, accounting for 40.61% (or 38.52Mn shares) of total volume, with a value contribution of LKR 2.97Bn.
Diversified sector followed suit, adding 16.06% to total turnover volume as 15.23Mn shares were exchanged.
The sector’s volume accounted for LKR 1.05Bn of total market turnover value. The Manufacturing Sector meanwhile, contributed 9.03Mn shares (or 9.52%), amounting to LKR 0.32Bn.
Top gainers and losers
Central Finance was the week’s highest price gainer; increasing 9.6% W-o-W from LKR 93.00 to LKR 101.90.
Hunas Falls gained 8.2% W-o-W to close at LKR 49.90. Cargo Boat (+8.2% W-o-W) and Bansei Resorts(+8.2% W-o-W) were also amongst the gainers.
Adam Investments was the week’s highest price losers, declining 20.0% W-o-W to close at LKR 0.40 while Nation Lanka (-13.3% Y-o-Y), Convenience Food (-11.2% W-o-W) & Brac Lanka Finance (-10.3% W-o-W) were also amongst the top losers over the week.
Foreign investors closed the week in a net buying position with total net inflows amounting to LKR 0.73Bn relative to last week’s total net inflow of LKR 0.54Bn (+35.9% W-o-W).
Total foreign purchases increased by 43.47% W-o-W to LKR 3.23Bn from last week’s value of LKR 2.25Bn, while total foreign sales amounted to LKR 2.50Bn relative to LKR 1.71Bn recorded last week (+45.84% W-o-W).
In terms of volume, JKH & Tokyo Cement led foreign purchases while Dialog & Vallibel led foreign sales. In terms of value JKH & Commercial Bank led foreign purchases while Lion Brewery & Chevron led foreign sales.
Point of view
Institutional & HNI investors dominated market activity this week, accounting for ~56% of total market turnover amid strong interest in Blue-chip counters.
Average market turnover levels consequently hit a 3-week high of LKR1.3Bn, ~58% higher than last week’s average of LKR0.83Bn but ~55% lower than the YTD high of LKR2.95Bn (when Hayley’s acquired Singer Sri Lanka).
Strong foreign buying in Commercial Bank pushed up Monday’s daily turnover levels to LKR2.5Bn,
with crossings in the counter accounting for 54% of the day’s turnover. The interest in the stock resulted in it accounting for ~46% of the week’s total crossings.
Interest in Blue-chip JKH (26% of total crossings) and Sampath Bank (14% of total crossings) also drove crossings over the week while crossings in mid-caps LION, HHL, TKYO & SUN accounted for the remaining 14% of crossings for the week.
Despite the robust Institutional and HNI activity however, the broad-share Index closed flat over the holiday-shortened trading week, closing just 9 points above last week to hold at the 6620-levels.
Helped in part by the heavy buying in JKH and COMB, net foreign flows to the Bourse remained positive for the 2nd consecutive week since Oct 20th when the CSE last recorded net foreign outflows.
The CSE has recorded net foreign outflows just 6 times (ie: 6-weeks out of the years 44-weeks) this year with the largest of them being due to the strategic sale by Singer BV of Singer Sri Lanka to conglomerate Hayleys.
The CBSL’s monetary policy decision and the National Budget for 2018 are likely to drive markets in the week ahead.
Urban inflation hits high in October
Urban headline inflation levels hit a 3-year high in October, with the CPI (Base Year=2013) hitting 7.8% Y-o-Y amid increases in both food and non-food inflation.
Food inflation rose to 12.6% Y-o-Y (cf. 10.4% in September) amid adverse supply condition due to the drought/floods that prevailed in the months prior, with prices of key items such as Rice & Coconuts rising notably.
On a Y-o-Y basis, the contribution of food commodities to inflation was 3.71%. The contribution of Non Food items to inflation meanwhile was 4.05%, and non-food inflation for the month increased to 5.8% Y-o-Y (cf. 5.5% in September) mainly due to increases Education (0.87%), Health (0.55%), Restaurants & Hotels (0.51%), Communication (0.41%), and Transport (0.39%).
Despite the increase in headline inflation over the month, core inflation - which excludes energy and key food items and levels out short term volatility to indicate underlying inflation- in October fell 0.1% M-o-M to reach 5.8% Y-o-Y (cf. 6.0% Y-o-Y in September).
Moving Average Inflation (which measures the change between the average Price Index of last 12 months & the average Price Index of previous 12 months) meanwhile rose marginally to 6.1% (CPI) and 6.0% (core CPI).
The increase in inflation levels largely reflects supply-side factors such as the VAT changes and drought-induced supply disruptions.
Demand-driven inflation levels by contrast have been largely stable as evidenced by the decline in core inflation levels over the month.
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