"Bull markets go to people's heads. If you're a duck on a pond, and it's rising due to a downpour, you start going up in the world. But you think it's you, not the pond." - Charlie Munger
Friday, 10 May 2013
Policy rates revised downwards while market soars...
The activities at the bourse sustained the upward momentum from the previous week with both indices gaining considerable value. The ASI gained 236.82 points WoW to close at 6,250 points (3.9%), whilst the S&P SL20 Index gained 124.91 points WoW to close at 3,530.90 points (3.7%). Indices benefited mainly on the back of the gains made by John Keells Holdings (6.2% WoW), Aitken Spence (8.8% WoW), Distilleries Company of Sri Lanka (6.3% WoW), Hemas Holdings (20.7% WoW) and Vallibel One (14.5% WoW).
Heightened activity was witnessed across the board in the Colombo bourse over the week which led to the market appreciating close to 4% WoW which also resulted in a jump in YTD performance from 6.6% to 10.8%. This may have been due to a build up in anticipation of a possible revision of policy rates which was scheduled for the end of the week.
Investor expectations were confirmed with a significant 50 bps reduction being made to policy rates. Interest continued to be witnessed in Banking & Finance sector counters with firms such as Commercial Bank, Hatton National Bank, National development Bank and Seylan Bank on the expectation that the policy revision will be favourable to earnings.
Having said that, we would like to draw investor attention to the following developments; The CBSL disclosed that a pickup in Furnace oil prices was witnessed in April whilst the proposed electricity tariff hike was finalised. The combined effect could place supply side pressure on Inflation which could dampen the performance of energy intensive firms in the short to medium term.
The week also marked a change in ownership which took place in Lanka Ceramics where Royal Ceramics acquired a controlling stake in the former. As per a CSE disclosure, approx 22.8mn shares of Lanka Ceramic which represents 76.1% of the issued share quantity was directly purchased by Royal Ceramics. As a result considerable activity was witnessed in the two counters as well as in Vallibel One; the parent company of Royal Ceramics during the first half of the week.
Furthermore, Lanka Ceramic, Touchwood Investments, Vallibel One, PC House and Commercial Bank topped the list in terms of volume traded during the week.
The week saw foreign purchases amounting to LKR 1,880.4 mn whilst foreign sales amounted to LKR 1,216.4 mn. Market capitalisation stood at LKR 2,395.5 bn, and the YTD performance is 10.8%.
Conclusion:
Policy Rate cut coupled with continued foreign participation to boost investor confidence...
Market gradually continued to build up on the 6,000 levels, after falling below the 5,000 levels in August last year. All Share Index managed to accumulate a whopping 236.8 points during the week on the back of healthy retail and institutional participation.
Fundamentally sound stocks were taking the lead, whilst foreign investors continued with their block trades in selected counters resulting in the net foreign inflow for the week to reach a satisfactory LKR664 mn. It could be observed that continuous foreign investor participation had been an inspirational factor for local institutional investors to be active again.
CBSL announced a 50 basis point (bps) policy rate cut on Friday paving its path towards a further monetary expansion since the 25 bps policy rate cut in December 2012.
Accordingly, after the policy rate reduction, Repurchase rate (REPO) would be at 7.0% while the Reverse Repurchase rate (Reverse Repo) would be at 9.0%. CBSL expects the policy rate reduction to increase private sector credit growth, and improve the economic growth whilst facilitate the government to finance the public investment programme at lower costs. On the back of this development, we expect the equity market to be more attractive relative to other investments modes. Thus, we advice investors to take positions on fundamentally sturdy counters with high growth potential to reap benefits.
Further, country’s Treasury bill rates also witnessed a continuous decline over the past few weeks which could also be attributed to the expectations regarding the reduction in policy rates. During the week the 3 months T-bill rates dipped by 02 bps to stand at 9.18% while six months T bill rates also dropped by 02bps to close at 10.20%.
Source: Asia Wealth Management Research
Thursday, 9 May 2013
Quote for the day
"I only use common sense. I buy when things are low and no one wants them. I keep them until they go up, and people are crazy to get them. That is, I believe, the secret of all successful business." - Hetty Green
LSL Market Review 9th May 2013
Colombo Bourse closed higher on Thursday for the sixth day in a row, propelling the All Share Index up more than 226 points this week, after Central Bank governor hinted that the central bank may lower policy rates again. The Monetary Board is expected to release the policy review for this month, tomorrow.
ASI gained 28.61 points (+0.5%) to close at 18 month high of 6,238.71. S&P SL 20 index closed at 3,526.51 with gain of 5.21 points (+0.2%). Investors' renewed hopes for a rate cut drove the activity levels across the board and the market turnover reached Rs. 2.1bn.
Commercial Bank (Rs.416.5mn), Distilleries (Rs.315.4mn) and HNB (RS.207.7mn) were the top contributors to the turnover. Touchwood Investments (Rs.6.30,+5%), Capital Alliance Finance (Rs.26.80,+23%), East West Properties (Rs.17.20,+12%), Vallibel One (Rs.20.90,-3%) and Dankotuwa Porcelain (Rs.18.60,+3%) were among the heavily traded counters. Access Engineering, Royal Ceramics, Nation Trust Bank, Hemas Holdings, Piramal Glass, National Development Bank, ACL Cables were among the 18 counters that reached 52 week high today.
Cash map for today was 56%.
Foreigners were net buyers with net foreign inflow of Rs.194.1mn. Foreign participation accounted for 26% of the market activity. Net foreign inflow was seen in counters such as Distilleries, HNB and NDB.
Stock Market Losers and Trading!
The average online stock market trader is almost always a sure loser!
Stock trading is a "GAME" in which you cannot afford to be average. Every day thousands of new and inexperienced traders are being charged large amounts of money by scam artists and self proclaimed "experts" for dubious stock picking services, "mechanical buy and sell signal generators" and "advice."
Which stocks to trade?
When to enter the trade?
When to get out of the trade?
Novice traders have a 99% failure rate. If they fail who is to blame?
Bad luck? I don't think so!
Trading success has nothing to do with luck. It has everything to do with you:
Your discipline,
Your hard work and ...
Your courage!
Did you know that successful stock traders couldn't care less about whether the markets are dropping? That's right!
In fact, the panic and fear that accompany falling markets make it easier for successful traders. The reason - panicky investors and traders have very predictable behavior, and it's precisely this predictability that gives the successful traders their competitive edge.
The typical inexperienced member of the trading "herd" enters the market at a high point with the notion that he might be left out of an ongoing rally.
On the other hand, exactly at this very same point, the experienced traders start to cash in on their profits and the rally quickly starts running out of steam!
When the stock declines to the point where the novice trader cannot take any more "pain" he gets out of the market, just before the stock finally hits it's very bottom.
Market volatility is an essential element in successful trading. You can profit from upturns and downturns in the market - you only need volatility. What will happen to the stock markets over the next two months or two years? I couldn't care less! I will still make money either way!
"It is not time to buy, but it is too late to sell!"
If it's not time to buy it is definitely time to sell. If you are in a trade and the reasons that got you there in the first place cease to exist, you should get out!
A misconception that losing traders have is that there are various "forces" out there who are controling prices and if they could just get closer to the "source" they would become winning traders.
Don't get me wrong now ...
If the markets move up or down, surely someone is making a profit. The question you need to ask yourself is:
Who is profiting from your losses?
Traders with more experience than you are taking your hard earned cash!
If you think that you can trade couple of hours or days per month and make huge profits then ...
Do wake up!
If you are not willing to invest your time, effort and funds, don't even start!
Trading success doesn't come for free!
But do remember:
If you get properly prepared and work really hard, you also can certainly make some huge profits in trading stocks!
Source:http://www.greekshares.com
Stock trading is a "GAME" in which you cannot afford to be average. Every day thousands of new and inexperienced traders are being charged large amounts of money by scam artists and self proclaimed "experts" for dubious stock picking services, "mechanical buy and sell signal generators" and "advice."
Which stocks to trade?
When to enter the trade?
When to get out of the trade?
Novice traders have a 99% failure rate. If they fail who is to blame?
Bad luck? I don't think so!
Trading success has nothing to do with luck. It has everything to do with you:
Your discipline,
Your hard work and ...
Your courage!
Did you know that successful stock traders couldn't care less about whether the markets are dropping? That's right!
In fact, the panic and fear that accompany falling markets make it easier for successful traders. The reason - panicky investors and traders have very predictable behavior, and it's precisely this predictability that gives the successful traders their competitive edge.
The typical inexperienced member of the trading "herd" enters the market at a high point with the notion that he might be left out of an ongoing rally.
On the other hand, exactly at this very same point, the experienced traders start to cash in on their profits and the rally quickly starts running out of steam!
When the stock declines to the point where the novice trader cannot take any more "pain" he gets out of the market, just before the stock finally hits it's very bottom.
Market volatility is an essential element in successful trading. You can profit from upturns and downturns in the market - you only need volatility. What will happen to the stock markets over the next two months or two years? I couldn't care less! I will still make money either way!
"It is not time to buy, but it is too late to sell!"
If it's not time to buy it is definitely time to sell. If you are in a trade and the reasons that got you there in the first place cease to exist, you should get out!
A misconception that losing traders have is that there are various "forces" out there who are controling prices and if they could just get closer to the "source" they would become winning traders.
Don't get me wrong now ...
If the markets move up or down, surely someone is making a profit. The question you need to ask yourself is:
Who is profiting from your losses?
Traders with more experience than you are taking your hard earned cash!
If you think that you can trade couple of hours or days per month and make huge profits then ...
Do wake up!
If you are not willing to invest your time, effort and funds, don't even start!
Trading success doesn't come for free!
But do remember:
If you get properly prepared and work really hard, you also can certainly make some huge profits in trading stocks!
Source:http://www.greekshares.com
Wednesday, 8 May 2013
Quote for the day
“I became overconfident, and that is the most dangerous state of mind anyone can develop in the stock market.” - Nicolas Darvas
LSL Market Review 8th May 2013
Market maintained the momentum with blue-chips leading the way again. Retail counters rallied around blue-chips to entice further speculation of an upward movement in the stock market. Although valuations remain favourable, investors are advised to book profits when able to.
ASI gained 8.42 points (0.14%) to close at 6,210.10 and the S&P SL20 index gained 9.35 points (0.27%) to close at 3,521.30. Turnover was Rs. 1,465.4Mn.
Top contributors to turnover were Commercial Bank with Rs. 371.6Mn, Vallibel One with Rs. 114.0Mn and John Keells Holdings with Rs. 105.1Mn. Most active counters for the day were Vallibel One, Pan Asia Bank and Capital Alliance Finance.
Notable gainers for the day were Capital Alliance Finance up by 19.0% to close at Rs. 23.20, Ceylinco Insurance up by 10.0% to close at Rs. 1,100.00 and Shaw Wallace up by 9.5% to close at Rs. 266.00. Notable losers for the day were Blue Diamonds non-voting down by 5.9% to close at Rs. 1.60, Stafford Hotels down by 5.4% to close at Rs. 36.80 and CFT down by 4.7% to close at Rs. 6.10.
Cash map was 55.25%. Foreign participation was 24.19% of total market turnover and net foreign selling was Rs. 92.13Mn.
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