DNH MARKET WATCH

DNH Financial (Pvt) Ltd.

www.dnhfinancial.com +94115700777
Market Indices
7,000 6,800 6,600 6,400 6,200 6,000 5,800 5,600 25/7/11 26/7/11 27/7/11 28/7/11 ASI MPI

Daily
29th July 2011
Market Performance
ASPI MPI Turnover (bn) Foreign Purchases (mn) Foreign Sales (mn) Traded Companies Market PER (X) Market Cap (LKR bn) Market Cap (US$ bn) Dividend Yield (%) Price to Book (X) 29.07.2011 6,845 6,210 3.1 174.5 582.1 238 21.6 2,445 22.2 1.4 2.8 28.07.2011 6,654 6,078 1.5 38.8 170.4 235 21.5 2,376 21.5 1.5 2.8 %Chg. 2.9 2.2 111.1 349.7 241.6 1.3 0.5 2.9 2.9 -6.7 0.0

29/7/11

Market Outlook
The market continued to edge upwards with the ASPI rising by 2.9% to reach 6845, closing just below the key psychological resistance level of 7000 while the MPI rose by 2.2% to end the session at 6210. Gains were broadbased with market turnover crossing the LKR3 bn mark. Winners comfortably outpaced losers with Three Acre Farms, Grain Elevators and Confifi Hotels rising by 36%, 34% and 33% respectively offsetting declines in Associated Motor Finance, Onally Holdings and Reefcomber which lost 7%, 7% and 6%. Meanwhile, Grain Elevators, Three Acre Farms, Reefcomber and Bairaha Farms were amongst the significant trades for the day accounting for a third of turnover. In Corporate news, banking heavyweight Sampath Bank released its 2Q2011 results recording a 12% jump in interest income to LKR5.1 bn on the back of strong growth in its loan book to LKR149 bn. Pre-tax profits were boosted by a loan loss reversal of LKR405 mn, enabling net profits to grow by 52% during the quarter to LKR1.1 bn. Meanwhile, Pan Asia Bank net profits rose 152% to LKR210 mn on the back of a 47% jump in interest income to LKR1.0 bn and a 34% rise in fee income to LKR133 mn. The banks loan book grew at a staggering 115% growth during the quarter to LKR26.6 bn while NPLs remained relatively steady at LKR2.6 bn. We expect the market to test the all important 7000 resistance level next week with strong corporate results releases providing the necessary impetus for a break to the upside. Consequently, we advise investors to position themselves to take advantage of the current momentum in the market by building a portfolio of fundamentally strong stocks that will generate above market returns.

Quarterly Financials
Sampath Bank

LKR Mn Interest Income Other Income Net Profit EPS (LKR)

2011 5,130 1,238 1,135 7.3

2010 4,589 1,362 746 4.8

% Chg 12 (9) 52

Gainers /Losers (%)

Alliance -3.7

Reefcomber -5.7 Onally Hold. -6.7 Associated Motor Fin. -6.8 Lankem Dev. Confifi Hotels Grain Elevators Three Acre Farms 23.0 33.0 34.0 36.0

Significant Trades (Turnover in LKR Mn)

400 300 200 100 0 GRAN TAFL REEF BFL

Global Markets
Sri Lanka - ASPI India - Sensex Pakistan - KSE 100 Taiwan Weighted Singapore - Strait Times Hong Kong - Hang Seng Index 6845 18197 12193 8644 3189 22440 %Chg. 2.88 -0.07 -0.79 -1.40 -0.03 -0.60

Interest Rates & Currencies

Prime Lending Rate (Avg. Weighted) Deposit Rate (Avg. Weighted) Treasury Bill Rate (360 Days) Dollar Dominated Bond Rate LKR/US$ (Selling Rate) LKR/EURO (Selling Rate) 29.07.2011 13.7% 6.3% 7.3% 6.3% 110.3 159.2

Disclaimer
This Review is prepared and issued by DNH Financial (Pvt.) Ltd. (DNH) based on information in the public domain, internally developed and other sources, believed to be correct. Although all reasonable care has been taken to ensure the contents of the Review are accurate, DNH and/or its Directors, employees, are not responsible for the correctness, usefulness, reliability of same. DNH may act as a Broker in the investments which are the subject of this document or related investments and may have acted on or used the information contained in this document, or the research or analysis on which it is based, before its publication. DNH and/or its principal , their respective Directors, or Employees may also have a position or be otherwise interested in the investments referred to in this document. This is not an offer to sell or buy the investments referred to in this document. This Review may contain data which are inaccurate and unreliable. You hereby waive irrevocably any rights or remedies in law or equity you have or may have against DNH with respect to the Review and agree to indemnify and hold DNH and/or its principal, their respective directors and employees harmless to the fullest extent allowed by law regarding all matters related to your use of this Review.