Market overview: Market dull with weak fundamentals. Activity levels remained weak with the ASI ending the week at 577.7 down 5.23%, while the MPI closed at 945.3 down 6.11%. Turnover for the week stood at SLRs 185.1 mn up 94% from last week. Foreign activity was relatively high this week with Net foreign outflow amounting to a significant SLRs 262.8 Mn.

Overall activity levels remained dull this week. Some foreign selling on key blue chips did boost turnover, however overall things were unexciting. The weakening in indices was expected, as overall macro fundamentals cannot support a significant rise in the market. This correction was expected. We believe that as most large local funds are still on the sidelines, has not helped boost activity. However we could possibly see more proactive participation over the coming few months, once new policies and macro economic reforms come in to play, this in turn would further boost and support retail activity. Most investors would be looking towards the up coming budget, which would be an indicator of the government’s policies and proposals.

We believe that in order to further strengthen investor confidence one would need to see the govt. now implementing their proposals urgency in policy implementation, significant reforms to stabilize the deteriorating macro economic environment and more concrete steps towards restoring peace. We believe that this would help boost foreign participation in the market. This in turn would help sustain longer-term growth on the economic front, which would reflect positively on the equities market.