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Daily
5th October 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) 05.10.2011 6,706 5,967 1.3 67.8 155.8 234 17.3 2,408 21.7 1.6 2.2 04.10.2011 6,722 5,983 2.0 98.1 166.7 245 17.3 2,414 21.7 1.6 2.2 %Chg. -0.2 -0.3 -33.1 -30.9 -6.5 -4.5 0.0 -0.2 -0.2 0.0 0.0

DNH MARKET WATCH

Market Indices
6,900 6,700 6,500 6,300 6,100 5,900 5,700 29/9/2011 30/9/2011 3/10/2011 4/10/2011 5/10/2011

ASI MPI

Market Outlook
Trading on the bourse today was anything but inspiring with the ASPI and the MPI dropping a notch to 6706 and 5967 on the back of lackluster investment sentiment. Turnover declined to a two week low, falling to LKR1.3 bn with trading in E-Channelling, Radiant Gems and Hydro Power Free Lanka accounting for 34% of the days total. Losers outpaced gainers, with Associated Motor Finance, Singer Industries and Ceylon Hospitals declining by 10.0%, 9.8% and 9.4% offsetting gains in Alliance Finance, E-Channelling and Hayleys Exports which rose by 13.8%, 12.6% and 11.4% respectively. Global markets meanwhile ended mixed following a strong late rebound on Wall Street, as investors welcomed a report suggesting EU leaders may recapitalize the regions banks and take the opportunity to pick up recently battered stocks. Almost a year after the strong bull market rally when the ASPI achieved new all-time highs, investment in the bourse appears radically different especially over the last few weeks. Investors and speculators alike appear to have taken a back seat regardless of fundamental merit. However, we believe that the current consolidation process provides the ideal opportunity for investors to benefit fully from a prolonged market rise and to adopt a highly selective approach when re-entering the market. We advise investors to commence their cherry picking now rather than later by identifying companies with strong and sustainable top line revenue growth that will filter down into quality bottomline growth and outperform the market in the medium to longer term.

Market Turnover

Gainers /Losers (%)

Trans Asia Hotels
Ceylon Hospitals

-9.1

-9.4 -9.8 -10.0 9.6

11.4

Singer Industries Associated Motor Finance Ceylon & Foreign Trades Hayleys Exports
E-Channelling

12.6
13.8

Alliance Finance

Significant Trades (Turnover in LKR Mn)

400 300 200 100 0 ECL RGEM HPFL REG

Global Markets
Sri Lanka - ASPI India - Sensex Pakistan - KSE 100 Taiwan Weighted Singapore - Straits Times Hong Kong - Hang Seng Index 6706 15792 11868 6989 2529 N/A %Chg. -0.22 -0.46 0.55 -0.83 -0.09 N/A

Interest Rates & Currencies

Prime Lending Rate (Avg. Weighted) Deposit Rate (Avg. Weighted) Treasury Bill Rate (360 Days) Dollar Denominated Bond Rate LKR/US$ (Avg. Rate) LKR/EURO (Avg. Rate) 22.08.2011 05.10.2011 9.1% 6.5% 7.3% 6.3% 111.1 148.4

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.