An Analysis of the Stock Market Forecasting in Sri Lanka done by Tharindu Nishshanka Muhandiram

4328: Artificial Neural Networks in Accounting

B.Sc. Accounting (Special) Degree

Year IV Semester II

An Analysis of the Performance of Weighted Moving Average Technique

for Stock Market Forecasting

By

Name CPM No: MC No:

K.M.T.N.Muhandiram 7418 61374

February, 2014

Department of Accounting

Faculty of Management Studies and Commerce

University of Sri Jayewardenepura

Nugegoda.

1

TABLE OF CONTENTS

1. Abstract ............................................................................................................... 02-02

2. Introduction ......................................................................................................... 03-05

3. Literature review ................................................................................................. 06-07

4. Research Design.................................................................................................. 08-11

5. Data Analysis ...................................................................................................... 12-59

6. Conclusion .......................................................................................................... 60-60

7. Recommendations ............................................................................................... 61-61

8. References……………………………………………………………………...62-65

2

Abstract

In this paper, I demonstrated a method to forecast the quarterly stock price available in

Colombo Stock Exchange using weighted moving average technique by sub dividing the all

listed quoted companies into twelve industries. Stock price prediction is one of the emerging

fields in neural network forecasting area. Other techniques such as Index Terms—Neural

network, Financial, Stock movement, Modeling, Simulation, State of the art, are also

mentioned as weighted moving average method is not the only tools used to predict stock

movements.

Stock prediction with data mining techniques is one of the most important issues in finance

being investigated by researchers across the globe. Data mining techniques can be used

extensively in the financial markets to help investors make qualitative decision. One of the

techniques is artificial neural network (ANN). However, in the application of ANN for

predicting the financial market the use of technical analysis variables for stock prediction is

predominant but there are some difficulties encountered when modeling such neural

networks. Stock market prediction is very difficult since it depends on several known and

unknown factors while weighted moving average technique is a popular technique for the

stock market forecasting.

In this paper, weighted moving average technique and statistical techniques are employed to

model and forecast the quarterly stock market prices and then the results of these models are

grafted and tabulated. The forecasting ability of this model is accessed using MAE, MPE,

MAPE, MSE and RMSE. The results show that weighted moving average method can predict

the stock market prices very well. Statistical technique though well built and they can be used

as a better alternative technique for forecasting the quarterly stock market prices which guide

for traders and investors in making qualitative decisions.

Keywords - Quarterly share price forecasting, ANN, Weighted moving average technique,

Mean Square Error, Mean Absolute Error, Root Mean Squared Error, Decision Support.

3

Chapter 01 Introduction

Stock movement prediction has been at focus for years since it can yield significant profits.

Fundamental and technical analysis was the weighted moving average method used to

forecast stock prices. A new method appeared more recently, the technological analysis,

where computers are used as a tool to predict the stock movements. Technological analysis

tries to model and simulate as accurately as possible the behavior of the stock exchanges, by

different techniques which I will discuss in the following. The first market hypothesis is that

stock prices follow a random walk. However, many researchers and economists were able to

extract rules for predicting the stock prices evolution, showing that some basic observations

significantly increase the quality of their predictions.

Stock price prediction is one of the most important topics in finance and business. However,

the stock market domain is dynamic and unpredictable. Several research efforts have been

carried out to predict the market in order to make profit using different techniques ranging

from statistical analysis, technical analysis, to fundamental analysis among others, with

different results. These techniques cannot provide deeper analysis that is required and

therefore not effective in predicting stock market prices.

Weighted moving average technique is one of data mining and forecasting techniques that is

gaining increasing acceptance in the business area due to its ability to learn and detect

relationship among nonlinear variables. Also, it allows deeper analysis of large set of data

especially those that have the tendency to fluctuate within a short of period of time.

The elasticity and adaptability advantages of the weighted moving average technique have

attracted the interest of many other researchers. Apart from business and banking domain,

other interested disciplines where weighted moving average technique is being engaged

including the electrical engineering, robotics and computer engineering, oil and medical

industries. Since the last decade, the weighted moving average technique has been used

extensively in the fields of business, finance and economics for several purposes like time

series forecasting and performance measurement.

Financial forecasting is of considerable practical interest and due to weighted moving average

technique’s ability to mine valuable information from a mass history of data; its applications

to financial forecasting have been very popular over the last few years. However, the focus of

this paper is to improve the accuracy of stock price prediction by using the weighted moving

average approach that combines the variables of technical and fundamental analysis for the

creation of weighted moving average technique predictive model for stock price prediction.

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The technical analysis variables are the core stock market indices (current stock price,

opening price, closing price, volume, highest price and lowest price etc.) while the

fundamental analysis variables are company performance indices (price per annual earning,

rumor/news, book value and financial status etc.).

From the beginning of time it has been man’s common goal to make his life easier. The

prevailing notion in society is that wealth brings comfort and luxury, so it is not surprising

that there has been so much work done on ways to predict the markets. Therefore forecasting

stock price or financial markets has been one of the biggest challenges to the artificial

intelligent community. Various technical, fundamental, and statistical indicators have been

proposed and used with varying results. However, none of these techniques or combination of

techniques has been successful enough. The objective of forecasting research has been

largely beyond the capability of traditional artificial intelligence research which has mainly

focused on developing intelligent systems that are supposed to emulate human intelligence.

By its nature the stock market is mostly complex (non-linear) and volatile. With the

development of weighted moving average technique, researchers and investors are hoping

that the market mysteries can be unraveled.

It should be mentioned that, although sometimes the rules or patterns that we are looking for

might not be easily found or the data could be corrupted due to the process or measurement

noise of the system, it is still believed that the inductive learning or data driven methods are

the best way to deal with real world prediction problems.

In the following I will briefly introduce the idea of weighted moving average technique in the

chapter 03 where as the second chapter presents the literature review. In the fourth chapter

the experimental results of the weighted moving average method on a company’s quarterly

share price data will be analyzed using different presentation models. Finally the fifth chapter

concludes the research paper and describing the future works of the study including the

recommendation is in chapter six.

1.2 Problem statement

This research studies how to identify the best industry/s to invest and to identify the best

quoted companies to invest mainly to achieve speculative objective by obtaining capital gain

rather than dividend income using the quarterly share price movement analyzed using

weighted moving average technique over nine years for all listed companies under twelve

industry clusters.

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1.3 Objectives of the study

The key objectives of this research article are to focus on the forecasting the share prices of

each listed quoted companies for the first quarter of the year of 2014, where the sub

objectives are;

1. To investigate the best performed industries to diversify in terms of increasing forecasted

industry average share prices.

2. To identify the best performed companies in selected industries to invest and obtain

capital gain in terms of increasing the forecasted company share prices.

1.4 Significance of the study

Only few researches have been conducted in relating to forecasting the share prices for

quoted listed companies in Colombo Stock Exchange but none of the research conducted

using the weighted moving average technique covering the all of listed companies under the

categories of major twelve industries in Sri Lankan economy. This research will be very

important to the investors who are expecting to invest in stock market and obtain the capital

gain rather than dividend income in the coming first quarter of 2014 and to identify the best

performed companies in the best performed industries in terms of increasing share prices.

1.5 Limitation of the study

This study has been conducted and come to a conclusion subject to the following limitations;

1. Only quoted listed companies operated in Sri Lankan economic context were selected and

all other companies are ignored.

2. Only share prices available in the CSE are considered whereas all other variables which

determined share price of a company were ignored.

3. Only quarterly share prices are considered in average basis.

4. Only weighted moving average method was used to forecast the share prices.

5. Time limitation.

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Chapter 2 Literature review

Investors in stock market primarily traded stocks based on intuition before the advent of

computers. The continuous growth level of investing and trading necessitate a search for

better tools to accurately predict the market in order to increase profits and reduce losses.

Statistics, technical analysis, fundamental analysis, time series analysis, chaos theory and

linear regression are some of the techniques that have been adopted to predict the market

direction (Ravichandran, 2005).

However, none of these techniques has been able to consistently produce correct prediction of

the stock market, and many analysts remain doubtful of the usefulness of many of these

approaches. However, these methods represented a base-level standard which neural

networks must outperform to command relevance in stock market prediction. Although the

concept of artificial neural networks (ANN) has been around for almost half a century, only

in the late 1980s could one ascertain that it gained significant use in scientific and technical

presentations. There are quite a lot of research works on the application of neural networks in

economics and finance, (S.A.Hamid, 2004).

According to E. Avci and H. White published the first significant study on the application of

the neural network models for stock market forecasting. Following White’s study, several

research efforts were carried out to examine the forecasting effectiveness of the neural

network models in stock markets. However, most of researchers have used to follow the

weighted moving average technique to forecast the share prices. Among the earlier studies,

the work in T. Kimoto and K.Kamijo can be mentioned. However, in another contribution,

M. Yoda in 1994 investigated the predictive capacity of the neural network models for the

Tokyo Stock Exchange. In 1992, F.S.Wong, neural network models were used to forecast

various US stock returns. Also, in 1993, L. Kryzanowski neural network models were used to

select the stock from the Canadian companies. In 2007 E. Avci, it was stated that the study of

stock prediction can be broadly divided into two schools of thought. One focuses on

computer experiments in virtual/artificial markets.

This is often the case when researchers model the complex movements in the market

economics H. Matsui, 2005. The other school focuses on stock prediction based on real-life

financial data as exemplified in D. Zhora and T. Yamashita, 2005. According to E.Avci,

different studies examined the stock market forecasting applications of neural network

models from different perspective.

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Some studies considered the effects of modeling preferences on one type of neural network

models. On the other hand, some other studies were devoted to investigating the forecast

performance differences among different neural network models said by S.H. Kim, 1998.

Other than the modeling issues, several studies evaluated the profitability of neural network

models in stock markets. Among these studies, J.T. Yao, 1999 and J.V. Rodriguez, 2005

reported that the technical trading strategy guided by feed forward neural network model was

superior to buy-and-hold strategy. However, previous efforts on stock market prediction have

engaged predominantly the variables of technical analysis. The impact of fundamental

analysis variables has been largely ignored.

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Chapter 3 Research Design

3.1 Background

The Colombo Stock Exchange (CSE) is the main stock exchange in Sri Lanka. It is one of

the most modern exchanges in South Asia, providing a fully automated trading platform. The

vision of the CSE is to contribute to the wealth of the nation by creating value through

securities. The headquarters of the CSE have been located at the World Trade Center

Towers in Colombo since 1995 and it also has branches across the country

in Kandy, Matara, Kurunegala, Jaffna, Negombo and Anuradhapura . As of 26 June 2013,

the Colombo Stock Exchange had 287 listed companies with a combined market

capitalization over 18.3 billion US dollars.

Share trading in Sri Lanka dates back to 1896 when the Colombo Brokers

Association commenced the share trading in limited liability companies which were involved

in opening plantations in Sri Lanka. The establishment of a formal stock exchange took place

in 1985 with the incorporation of the Colombo Stock Exchange (CSE), which took over the

Stock Market from the Colombo Share Brokers Association. It currently has a membership of

15 institutions, all of which are licensed to operate as stockbrokers.

As of 26 June 2013, 287 companies are listed on the CSE, representing twenty business

sectors with a market capitalization of 2.3 trillion rupees (over US$ 18.5 billion), which

corresponds to approximately 1/3 of the Gross Domestic Product of the country.

There are currently two indices in the CSE:

1. The All Share Price Index (ASPI)

2. The S&P Sri Lanka 20 Index (S & P SL 20)

(Milanka Price Index - MPI was abolished after 30/12/2012)

The exchange has pre-open sessions from 09:00 am to 09:30 am and normal trading sessions

from 09:30 am to 02:30 pm on all days of the week except Saturdays, Sundays and holidays

declared by the Exchange in advance. The CSE operates 3 main systems:

1. The Central Depository System (CDS)

2. Automated Trading System (ATS)

(After implementing ATS version-7, The Debt Securities Trading System (DEX) was

abolished since ATS-7 provides a platform for both Debt & Equity). The automation of the

http://en.wikipedia.org/wiki/Stock_exchange

http://en.wikipedia.org/wiki/Sri_Lanka

http://en.wikipedia.org/wiki/South_Asia

http://en.wikipedia.org/wiki/Automated_trading_platform

http://en.wikipedia.org/wiki/Colombo

http://en.wikipedia.org/wiki/Kandy

http://en.wikipedia.org/wiki/Matara,_Sri_Lanka

http://en.wikipedia.org/wiki/Kurunegala

http://en.wikipedia.org/wiki/Jaffna

http://en.wikipedia.org/wiki/Negombo

http://en.wikipedia.org/wiki/Anuradhapura

http://en.wikipedia.org/w/index.php?title=Colombo_Brokers_Association&action=edit&redlink=1

http://en.wikipedia.org/w/index.php?title=Colombo_Brokers_Association&action=edit&redlink=1

http://en.wikipedia.org/wiki/Sri_Lanka

http://en.wikipedia.org/wiki/All_Share_Price_Index

http://en.wikipedia.org/wiki/S%26P_Sri_Lanka_20_Index

9

Exchange commenced in 1991 with the installation of a central depository and an electronic

clearing and settlement system for share transactions. The trading activity was automated

with the installation of the Automated Trading System (ATS) in 1997.

The technology introduced by the Exchange has significantly enhanced the competitiveness

of the CSE and has provided a more efficient and transparent market. The CSE is currently in

the process of introducing a debt securities trading system for trading of fixed income

securities.

As a modern exchange, the CSE now offers state-of-the-art technological infrastructure to

facilitate an "order-driven trading platform" for securities trading - including shares,

corporate debt securities and government debt securities. The CSE was elected as a member

of the World Federation of Exchanges in October 1998 and also was the first Exchange in the

South Asian Region to obtain membership. The CSE is the 52nd

Exchange to have been

elected to membership of the Federation.

1. South Asian Federation of Exchanges SAFE

The CSE became a founder member of the SAFE in January 2000, and is currently the

Chairman of the Association. SAFE consists of 17 Exchanges from India, Pakistan,

Bangladesh, Sri Lanka, Nepal and Bhutan. Its primary objectives are to encourage

cooperation among its members in order to promote the development of their individual

securities markets, to develop an integrated regional stock trading system, and to offer listing

and trading opportunities for securities issued in the region. Companies listed on the CSE

have seen a large increase in foreign investment following the ceasefire agreement signed by

the Sri Lankan Government that brought an end to the 30 year old civil war.

Foreign investment in the stock market is freely permitted except in the case of a few

companies where there are certain restrictions imposed. Investment in shares in Sri Lanka and

repatriation of proceeds take place through Share Investment External Rupee Accounts

(SIERA) opened with licensed commercial banks. Income from investments such as interest,

dividends and profit realized from such investments are not subject to Exchange Control

Regulations by the Sri Lankan Government.

After witnessing mediocre performance throughout the 1990s mainly due to the Sri Lankan

Civil War, the ceasefire agreement signed in 2001 saw unprecedented growth in the both

indices of the CSE. The All Share Price Index, which was hovering around the 500 mark in

August 2001, has surpassed the 2000 mark after that.

http://www.safe-asia.org/index.asp

http://en.wikipedia.org/wiki/Sri_Lankan_Civil_War



10

This led CSE to be consistently dubbed as one of the best performing markets in the world.

As of 2005 the CSE had recorded a consistent annual growth of over 30% in the All Share

Price Index (ASPI) for the previous three years. It surpassed that in 2006, with the ASPI

growing by 41.6%, and the MPI growing by 51.4% during the calendar year. CSE recorded

the highest point in history on 26 February 2007. Milanka Price Index (MPI) reached 4,214.8

points on that day.

Buoyed by improved investor confidence due to positive political developments and strong

corporate results the CSE continued to achieve strong growth in 2007, as the ASPI surged

passed the 3,000 mark for the first time in its history on February 13, reaching a record high

for the seventh consecutive day. The CSE has also recorded an average daily turnover of Rs.

776.8 million for 2007.

After the end of the Sri Lankan Civil War on 18 May 2009, CSE indexes increased rapidly

creating new records. Market capitalization at the Colombo Stock Exchange reached record

high on 6th

October 2009 as it reached the Rs. 1 trillion marks for the first time in Sri Lanka’s

history. All Share Price Index (ASPI) broke the record for its previous high by marking

3549.27 points on 11th

January 2010. CSE was the best performing stock exchange in the

world in 2009 as it jumped 125.2 percent during that year.

3.2 Forecasting techniques

Many tools are used to try to model the behavior of the stock movements, and many

researches have been conducted with this goal in mind. However, many of them were done

by financial corporations, who keep them confidential as they are used to guide their financial

investments. Another point to consider is when dealing with researches their correctness. It

has been shown that for many reasons, in financial forecasting using neural networks most of

the search results can’t be used as is, as researchers did not fully investigate the potential of

their solutions. Among all the available techniques, here is the most commonly used WMA.

Weighted Moving Average (WMA) technique forecasts the share prices based on the

weighted moving average of a listed company over a given period of time, since the ability to

give more importance to what happened recently, without losing the impact of the past. For

this share price forecasting, 0.5, 0.3, and 0.2 have been used as the weights for each quarter

starting from the most resent three quarters respectively.


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3.3 Sample

The sample was measured as all listed companies listed in Colombo Stock Exchange under

the twelve industries namely Agriculture, Banking, Beverage, Diversified holding, Finance

and investment, Footwear and textile, Health care, Hotel, Insurance, Manufacturing,

Plantations, and Telecommunication.

3.4 Conceptual Framework

The figure 3.4 drafted below was the study model used to forecast the share prices in twelve

industries and individual companies with in the selected industry separately.

Figure 3.4 – Conceptual Framework

3.5 Data collection

Different sources plan have been used to collect data for this research. Several research

articles related to share price forecasting as well as official web site of Colombo Stock

Exchange were referred to obtain the daily share prices for the listed quoted companies in Sri

Lanka covering twelve industries. The daily share prices of each company were collected

from 1st January 2004 to 31

st December 2013. Then average quarterly share prices were

derived from the daily share prices and forecasted them using the weighted moving average

method.

1. Agriculture

2. Banking

3. Beverage

4. Diversified Holding

5. Finance and Investment

6. Footwear and Textile

7. Health care

8. Hotel

9. Insurance

10. Manufacturing

11. Plantations

12. Telecommunication

Forecasting by

using Weighted

Moving Average

Method. Which Companies

to be selected to

invest?

Which Industry to

be selected to

invest?

12

Chapter 4 Data Analysis

4.1 Agriculture industry

Share prices of agriculture industry were examined and tabulated (Refer table 4.1.1) to

forecasting the share prices for the first quarter of 2014. There were four listed quoted

companies namely Agstar Fertilizers Limited, CIC, Ceylon Tea Brokers Limited, and

Lankem Ceylon were identified and selected to represent the agriculture industry over last ten

years. Quarterly share prices were derived based on the average daily share prices published

in the Colombo Stock Exchange web site.

According to the selected forecasting technique of weighted moving average method,

agriculture industry average share price was continuously decreasing from the third quarter of

2011 to fourth quarter of 2013. (I.e. Rs. 175.30 to Rs. 51.79) (Refer table 4.1.1). Based on the

weighted moving average forecasting method, the forecasted share prices for the first

quarter of 2014 would be Rs. 48.94 which is below than the latest quarter share price of Rs.

51.79 in the fourth quarter of 2013 (Refer figure 4.1.1 and 4.1.2).

Based on the forecasting technique, mean absolute percentage error was almost equal to zero

i.e 0.28 and mean percentage error was – 0.10 (Refer table 4.1.1) which indicates the high

accuracy level of forecasting technique. Therefore, as industry wise, agriculture industry is

one of share price decline industry which required taking the prudent decision whether to

invest, hold or divest the investment made in the agriculture industry. However, it was noted

that the share prices of individual companies as well as the industry as a whole have started to

increase during the period from the first quarter of 2010 to second quarter of 2011 and then

started to decline continuously up to fourth quarter of 2013 and thereafter forecasted that the

share prices of whole industry would further be declined (Refer figure 4.1.1 and 4.1.2).

When further analyzing of agriculture industry, I could noted that Lankem Ceylon Plc has

reported the highest share price Rs. 419.60 in second quarter of 2011(Refer table 4.1.1). At

the end of fourth quarter of 2013, Rs. 130.00 (Refer figure 4.1.1 and 4.1.2) average share

price was reported as the highest company share prices of the agriculture industry. However,

when considering the each company separately in the agriculture industry all four companies’

share prices which ware forecasted for the first quarter of 2014, it was noted that the

forecasted share price going to be further declined which required to be taken the wise

decisions by the investors who are existing and potential before investing the agriculture

industry.

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Table 4.1.1

Agriculture Industry

Year Quarter

Agstar

Fertilizers

Limited CIC

Ceylon

Tea

Brokers

Limited

Lankem

Ceylon

Industry

Average

Quarter

Price (Yt)

Forecasted

Share Price Yt - Y^t Absolute

(Yt -

Y^t) /

Actual

%

Absolute

% (Yt - Y^t) ^2

Q 1 - 132.00 - 14.50 73.25

Q 2 - 142.00 - 23.25 82.63

Q 3 - 127.00 - 34.50 80.75

Q 4 - 125.00 - 34.00 79.50 79.81 (0.31) 0.31 0% 0% 0.10

Q 1 - 160.00 - 70.00 115.00 80.50 34.50 34.50 30% 30% 1,190.25

Q 2 - 152.75 - 67.50 110.13 97.50 12.63 12.63 11% 11% 159.39

Q 3 - 190.00 - 76.75 133.38 105.46 27.91 27.91 21% 21% 779.11

Q 4 - 150.00 - 38.00 94.00 122.73 (28.73) 28.73 -31% 31% 825.13

Q 1 - 179.00 - 54.00 116.50 109.04 7.46 7.46 6% 6% 55.69

Q 2 - 64.00 - 40.00 52.00 113.13 (61.13) 61.13 -118% 118% 3,736.27

Q 3 - 67.00 - 45.00 56.00 79.75 (23.75) 23.75 -42% 42% 564.06

Q 4 - 98.00 - 39.50 68.75 66.90 1.85 1.85 3% 3% 3.42

Q 1 - 90.00 - 36.75 63.38 61.58 1.80 1.80 3% 3% 3.24

Q 2 - 38.50 - 33.50 36.00 63.51 (27.51) 27.51 -76% 76% 756.94

Q 3 - 39.75 - 32.25 36.00 50.76 (14.76) 14.76 -41% 41% 217.93

Q 4 - 38.75 - 34.50 36.63 41.48 (4.85) 4.85 -13% 13% 23.52

Q 1 - 33.75 - 46.50 40.13 36.31 3.81 3.81 10% 10% 14.54

Q 2 - 33.25 - 40.00 36.63 38.25 (1.63) 1.63 -4% 4% 2.64

Q 3 - 40.00 - 41.25 40.63 37.68 2.95 2.95 7% 7% 8.70

Q 4 - 28.75 - 23.25 26.00 39.33 (13.33) 13.33 -51% 51% 177.56

Q 1 - 31.50 - 28.75 30.13 32.51 (2.39) 2.39 -8% 8% 5.70

Q 2 - 59.00 - 38.50 48.75 30.99 17.76 17.76 36% 36% 315.51

Q 3 - 65.50 - 40.00 52.75 38.61 14.14 14.14 27% 27% 199.87

Q 4 - 63.00 - 45.00 54.00 47.03 6.98 6.98 13% 13% 48.65

Q 1 - 68.00 3.70 65.00 45.57 52.58 (7.01) 7.01 -15% 15% 49.12

Q 2 - 74.00 4.20 119.25 65.82 49.53 16.28 16.28 25% 25% 265.15

Q 3 - 137.50 4.50 210.10 117.37 57.38 59.99 59.99 51% 51% 3,598.60

Q 4 - 140.70 4.60 240.30 128.53 87.54 40.99 40.99 32% 32% 1,680.32

Q 1 - 155.00 4.90 401.50 187.13 112.64 74.49 74.49 40% 40% 5,549.26

Q 2 - 136.30 4.80 419.60 186.90 155.60 31.30 31.30 17% 17% 979.69

Q 3 - 130.00 8.20 325.10 154.43 175.30 (20.86) 20.86 -14% 14% 435.28

Q 4 - 111.50 7.70 260.00 126.40 170.71 (44.31) 44.31 -35% 35% 1,963.67

Q 1 10.20 95.60 5.00 180.00 72.70 146.91 (74.21) 74.21 -102% 102% 5,507.12

Q 2 7.90 84.90 4.90 133.10 57.70 105.16 (47.46) 47.46 -82% 82% 2,252.14

Q 3 7.80 83.50 6.60 205.10 75.75 75.94 (0.19) 0.19 0% 0% 0.04

Q 4 6.20 63.20 5.70 160.70 58.95 69.73 (10.78) 10.78 -18% 18% 116.10

Q 1 5.70 61.00 5.30 144.50 54.13 63.74 (9.62) 9.62 -18% 18% 92.45

Q 2 6.70 66.00 4.20 150.90 56.95 59.90 (2.95) 2.95 -5% 5% 8.69

Q 3 5.90 54.00 3.90 127.20 47.75 56.50 (8.75) 8.75 -18% 18% 76.61

Q 4 4.80 47.00 4.10 130.00 46.48 51.79 (5.31) 5.31 -11% 11% 28.20

2014 Q 1 48.95 (48.95) 48.95 2,396.35

Sum 3,045.43 2,912.73 (103.93) 813.61 -373% 1036% 34,086.96

N 40 38 38 38 37 37 38

Mean Absolute Error 21.41

Mean Percentage Error (0.10)

Mean Absolute Percentage Error 0.28

Mean Squire Error 897.03

Root Mean Squire Error 29.95

2010

2011

2012

2013

2004

2005

2006

2007

2008

2009

14

Figure 4.1.1

-

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

450.00

Q1

Q2

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er S

ha

re


Agstar Fertilizers Limited

CIC

Ceylon Tea Brokers Limited

Lankem Ceylon

Industry Average Quarter Price (Yt)

Forecasted Share Price

15

Figure 4.1.2

-

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00

200.00

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er S

ha

re


Industry AverageQuarter Price (Yt)


16

4.2 Banking industry

Share prices of banking industry were examined and tabulated (Refer table 4.2.1) to

forecasting the share prices for the first quarter of 2014. There were nine listed quoted

companies namely DFCC, HNB, Merchant Bank, NTB, Pan Asia, Sampath, Sanasa

Development, Seylan Bank, Union Bank were identified and selected to represent the

banking industry over last ten years. Quarterly share prices were derived based on the

average daily share prices published in the Colombo Stock Exchange web site.


banking industry average share price was continuously decreasing from the third quarter of

2010 to fourth quarter of 2013. (i.e. Rs. 235.63 to Rs. 75.41) (Refer table 4.2.1). Based on the





i.e 0.18 and mean percentage error was – 0.03 (Refer table 4.2.1) which indicates the high

accuracy level of forecasting technique. Therefore, as industry wise, banking industry is one

of share price decline industry which required taking the prudent decision whether to invest,

hold or divest the investment made in the banking industry. However, it was noted that the

share prices of individual companies as well as the industry as a whole have started to

increase during the period from the first quarter of 2010 to third quarter of 2010 and then

started to decline continuously up to fourth quarter of 2013 and thereafter forecasted that the

share prices of whole industry would further be declined (Refer figure 4.2.1 and 4.2.2).

When further analyzing of banking industry, I could noted that Sampath bank has reported

the highest share price Rs. 517.80 in third quarter of 2010 (Refer table 4.2.1). At the end of

fourth quarter of 2013, Rs. 166.00 (Refer figure 4.2.1 and 4.2.2) average share price was

reported as the highest company share prices of the banking industry. However, when

considering the each company separately in the banking industry all nine companies’ share

prices which ware forecasted for the first quarter of 2014, it was noted that the forecasted

share price going to be further declined except Union bank, Seylan bank, and NTB bank (i.e.

these three companies’ forecasted share price going to be increased.) which required to be

taken the wise decisions by the investors who are existing in the banking industry and

potential investors who are going to invest in the Banking industry.

17

Table 4.2.1

Banking Industry

Year Quarter DFCC HNB

Merchant

Bank NTB Pan Asia Sampath

Sanasa

Develop

ment

Seylan

Bank

Union

Bank

Industry

Average

Quarter

Price (Yt)

Forecasted

Share

Price Yt - Y^t Absolute

(Yt -

Y^t) /

Actual

%

Absolute

% (Yt - Y^t) ^2

Q 1 221.00 72.00 10.00 24.75 - 85.00 - 46.00 - 76.46

Q 2 239.00 66.25 14.75 22.25 - 86.00 - 39.75 - 78.00

Q 3 228.00 60.00 11.75 22.00 - 87.00 - 34.00 - 73.79

Q 4 206.00 57.00 9.25 18.75 - 62.75 - 31.00 - 64.13 75.59 (11.46) 11.46 -18% 18% 131.39

Q 1 238.50 59.00 30.25 21.75 20.00 76.00 - 34.50 - 68.57 69.80 (1.23) 1.23 -2% 2% 1.51

Q 2 245.00 80.00 32.00 22.25 17.25 84.50 - 37.00 - 74.00 68.28 5.72 5.72 8% 8% 32.70

Q 3 260.00 115.00 32.00 31.00 17.50 106.00 - 54.75 - 88.04 70.40 17.64 17.64 20% 20% 311.14

Q 4 220.00 110.00 14.00 23.50 16.00 90.00 - 36.75 - 72.89 79.93 (7.04) 7.04 -10% 10% 49.55

Q 1 220.25 120.00 18.75 24.00 15.25 85.25 - 37.00 - 74.36 77.66 (3.30) 3.30 -4% 4% 10.89

Q 2 163.00 103.75 14.25 20.00 13.25 80.25 - 33.50 - 61.14 76.65 (15.51) 15.51 -25% 25% 240.58

Q 3 160.75 102.00 15.00 26.00 15.25 93.25 - 40.00 - 64.61 67.46 (2.85) 2.85 -4% 4% 8.12

Q 4 178.25 158.75 15.25 28.00 10.25 107.00 - 33.75 - 75.89 65.52 10.38 10.38 14% 14% 107.64

Q 1 193.00 100.00 15.00 34.00 9.75 107.00 - 33.00 - 70.25 69.56 0.69 0.69 1% 1% 0.48

Q 2 148.00 97.50 13.00 30.50 9.75 113.75 - 27.00 - 62.79 70.81 (8.03) 8.03 -13% 13% 64.46

Q 3 128.00 102.75 13.25 35.00 10.50 116.25 - 30.00 - 62.25 67.65 (5.40) 5.40 -9% 9% 29.12

Q 4 127.00 122.50 14.00 29.75 10.50 120.00 - 32.00 - 65.11 64.01 1.10 1.10 2% 2% 1.20

Q 1 126.00 119.75 16.50 29.75 11.25 115.75 - 30.00 - 64.14 63.79 0.36 0.36 1% 1% 0.13

Q 2 120.50 99.00 13.25 34.00 12.75 97.00 - 29.00 - 57.93 64.05 (6.13) 6.13 -11% 11% 37.52

Q 3 100.00 99.00 12.00 30.00 12.00 90.00 - 27.00 - 52.86 61.23 (8.37) 8.37 -16% 16% 70.08

Q 4 53.00 69.75 7.25 22.25 10.25 68.00 - 28.50 - 37.00 56.64 (19.64) 19.64 -53% 53% 385.56

Q 1 68.00 78.00 9.00 23.75 9.50 70.00 - 36.00 - 42.04 45.94 (3.91) 3.91 -9% 9% 15.27

Q 2 135.25 119.00 16.50 30.50 13.75 109.00 - 35.00 - 65.57 42.69 22.88 22.88 35% 35% 523.59

Q 3 151.00 164.50 27.75 32.75 17.25 170.00 - 36.50 - 85.68 52.80 32.88 32.88 38% 38% 1,081.24

Q 4 167.00 170.25 19.50 36.75 20.25 204.25 - 37.00 - 93.57 70.92 22.65 22.65 24% 24% 513.18

Q 1 180.50 188.25 18.75 35.00 18.75 222.00 - 47.00 - 101.46 85.60 15.86 15.86 16% 16% 251.56

Q 2 267.75 281.00 28.50 55.50 32.00 359.25 - 81.75 - 157.96 95.94 62.03 62.03 39% 39% 3,847.10

Q 3 438.60 369.90 52.90 95.60 62.30 517.80 - 112.30 - 235.63 128.14 107.49 107.49 46% 46% 11,554.71

Q 4 200.20 399.90 45.80 83.40 52.00 271.90 - 97.80 - 164.43 185.50 (21.07) 21.07 -13% 13% 443.85

Q 1 171.80 380.00 46.20 76.30 51.30 288.30 - 75.20 35.80 140.61 184.50 (43.88) 43.88 -31% 31% 1,925.74

Q 2 146.40 205.30 44.90 66.20 26.00 240.10 - 68.60 25.40 102.86 166.76 (63.90) 63.90 -62% 62% 4,082.96

Q 3 128.30 198.00 40.20 61.90 25.10 218.10 - 65.10 22.00 94.84 126.50 (31.66) 31.66 -33% 33% 1,002.56

Q 4 112.90 151.30 39.60 57.00 25.40 195.00 - 67.60 19.00 83.48 106.40 (22.93) 22.93 -27% 27% 525.56

Q 1 112.60 153.00 29.30 56.90 23.50 179.80 94.50 66.90 17.50 81.56 90.76 (9.21) 9.21 -11% 11% 84.74

Q 2 110.40 147.00 21.00 47.00 17.30 152.00 85.10 59.80 13.50 72.57 84.79 (12.22) 12.22 -17% 17% 149.36

Q 3 122.30 166.00 25.00 61.90 20.90 215.70 90.90 69.10 16.90 87.63 77.45 10.19 10.19 12% 12% 103.80

Q 4 111.80 147.00 20.50 55.00 19.00 201.00 77.60 55.30 13.80 77.89 81.90 (4.01) 4.01 -5% 5% 16.07

Q 1 131.10 167.30 16.10 61.00 19.00 224.90 65.10 65.20 17.00 85.19 79.75 5.44 5.44 6% 6% 29.61

Q 2 138.00 161.20 16.50 62.90 19.00 204.70 71.20 67.00 17.40 84.21 83.49 0.72 0.72 1% 1% 0.52

Q 3 119.20 150.00 15.50 60.50 16.30 169.90 79.20 58.10 15.70 76.04 83.24 (7.20) 7.20 -9% 9% 51.78

Q 4 122.00 143.00 13.30 62.00 15.60 166.00 74.90 65.10 16.80 75.41 80.32 (4.91) 4.91 -7% 7% 24.13

2014 Q 1 77.36 (77.36) 77.36 5,984.74

Sum 3,352.83 3,199.75 (75.17) 707.23 -128% 652% 33,694.15

N 40 38 38 38 37 37 38






2010

2011

2012

2013

2004

2005

2006

2007

2008

2009

18

Figure 4.2.1

-

100.00

200.00

300.00

400.00

500.00

600.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er S

ha

re

Banking Industry

DFCC

HNB

Merchant Bank

NTB

Pan Asia

Sampath

Sanasa Development

Seylan Bank

Union Bank



19

Figure 4.2.2

-

50.00

100.00

150.00

200.00

250.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er S

ha

re

Banking Industry

IndustryAverageQuarterPrice (Yt)

Forecasted SharePrice

20

4.3 Beverage industry

Share prices of beverage industry were examined and tabulated (Refer table 4.3.1) to

forecasting the share prices for the first quarter of 2014. There were six listed quoted

companies namely Ceylon Brewery, Cargills, Keells Food, Nestle, Raigam Wayamba

Salterns Limited, Soy Foods were identified and selected to represent the beverage industry

over last ten years. Quarterly share prices were derived based on the average daily share

prices published in the Colombo Stock Exchange web site.


beverage industry average share price was continuously increasing from the first quarter of

2012 to fourth quarter of 2013. (i.e. Rs. 281.08 to Rs. 520.48) (Refer table 4.3.1). Based on

the weighted moving average forecasting method, the forecasted share prices for the first

quarter of 2014 would be Rs. 500.78 which is above than the latest quarter share price of

Rs. 468.81 in the fourth quarter of 2013 (Refer figure 4.3.1 and 4.3.2).


i.e. 0.28 and mean percentage error was – 0.03 (Refer table 4.3.1) which indicates the high

accuracy level of forecasting technique. Therefore, as industry wise, beverage industry is one

of share price increasing industry which required taking the prudent decision whether to

invest, hold or divest the investment made in the beverage industry. However, it was noted


increase during the period from the first quarter of 2012 to fourth quarter of 2013 and then

started to increase continuously up to fourth quarter of 2013 and thereafter forecasted that the

share prices of whole industry would further be increased (Refer figure 4.3.1 and 4.3.2).

When further analyzing of beverage industry, I could noted that Nestle Plc has reported the

highest share price Rs. 2,242.00 in fourth quarter of 2013 (Refer table 4.3.1). At the end of

fourth quarter of 2013, Rs. 2,242.00 (Refer figure 4.3.1 and 4.3.2) average share price was

reported as the highest company share prices of the beverage industry. However, when

considering the each company separately in the beverage industry all six companies’ share


share price going to be further increased which required to be taken the wise decisions by the

investors who are existing in the beverage industry and potential investors who are going to

invest in the beverage industry in the future mainly including the foreign investors.

21

Table 4.3.1

Bewerage Industry

Year Quarter

Ceylon

Brewery Cargills

Keells

Food Nestle

Raigam

Wayamba

Salterns

Limited

Soy

Foods

Industry

Average

Quarter

Price (Yt)

Forecaste

d Share


(Yt -

Y^t) /

Actual

%

Absolute

% (Yt - Y^t) ^2

Q 1 95.00 120.00 17.00 91.00 - 27.00 70.00

Q 2 96.00 300.00 21.00 86.00 - 37.75 108.15

Q 3 85.25 299.00 23.50 84.00 - 29.25 104.20

Q 4 76.00 250.00 29.50 88.50 - 36.00 96.00 98.55 (2.55) 2.55 -3% 3% 6.48

Q 1 80.25 275.00 38.00 95.00 - 46.50 106.95 100.89 6.06 6.06 6% 6% 36.72

Q 2 90.00 290.00 52.00 96.00 - 47.50 115.10 103.12 11.99 11.99 10% 10% 143.64

Q 3 150.00 675.00 59.50 103.00 - 81.00 213.70 108.84 104.87 104.87 49% 49% 10,996.67

Q 4 75.00 525.00 32.00 111.00 - 60.00 160.60 162.77 (2.17) 2.17 -1% 1% 4.71

Q 1 92.00 550.00 34.00 175.00 - 84.75 187.15 167.43 19.72 19.72 11% 11% 388.88

Q 2 85.00 515.00 26.00 180.50 - 70.00 175.30 184.50 (9.19) 9.19 -5% 5% 84.55

Q 3 88.00 545.00 34.25 240.00 - 80.50 197.55 175.92 21.64 21.64 11% 11% 468.07

Q 4 100.00 750.00 45.00 275.00 - 77.25 249.45 188.80 60.66 60.66 24% 24% 3,679.03

Q 1 85.00 450.00 49.75 260.00 - 65.00 181.95 219.05 (37.10) 37.10 -20% 20% 1,376.41

Q 2 67.00 500.00 40.00 254.00 - 61.00 184.40 205.32 (20.92) 20.92 -11% 11% 437.65

Q 3 79.00 750.00 51.00 260.00 - 80.00 244.00 196.68 47.33 47.33 19% 19% 2,239.66

Q 4 60.50 889.00 49.75 262.75 - 80.00 268.40 213.71 54.69 54.69 20% 20% 2,991.00

Q 1 67.00 1,999.75 56.00 251.00 - 80.00 490.75 244.28 246.47 246.47 50% 50% 60,747.46

Q 2 61.00 41.00 60.00 280.00 - 72.50 102.90 374.70 (271.80) 271.80 -264% 264% 73,872.52

Q 3 66.25 31.00 62.50 315.75 - 84.00 111.90 252.36 (140.46) 140.46 -126% 126% 19,727.61

Q 4 42.50 22.50 58.00 260.00 - 70.00 90.60 184.97 (94.37) 94.37 -104% 104% 8,905.70

Q 1 51.00 23.50 505.00 275.00 - 71.00 185.10 99.45 85.65 85.65 46% 46% 7,335.92

Q 2 72.50 49.00 61.75 350.00 - 90.00 124.65 142.11 (17.46) 17.46 -14% 14% 304.85

Q 3 85.00 57.00 69.75 405.00 - 100.00 143.35 135.98 7.38 7.38 5% 5% 54.39

Q 4 112.00 65.25 75.00 415.00 - 120.00 157.45 146.09 11.36 11.36 7% 7% 129.05

Q 1 180.00 70.50 69.00 490.00 4.30 144.50 159.72 146.66 13.06 13.06 8% 8% 170.48

Q 2 225.00 128.00 70.50 620.00 4.20 132.00 196.62 155.76 40.85 40.85 21% 21% 1,668.99

Q 3 325.00 207.40 139.80 670.00 4.30 150.00 249.42 177.71 71.70 71.70 29% 29% 5,141.37

Q 4 320.00 195.40 133.00 663.00 4.00 165.00 246.73 215.64 31.10 31.10 13% 13% 967.00

Q 1 370.00 228.30 150.00 640.80 4.50 405.20 299.80 237.52 62.29 62.29 21% 21% 3,879.42

Q 2 500.00 198.50 110.80 704.40 4.50 350.00 311.37 273.80 37.56 37.56 12% 12% 1,411.00

Q 3 436.00 201.90 118.30 875.70 4.50 393.20 338.27 294.97 43.30 43.30 13% 13% 1,874.60

Q 4 400.00 203.00 124.50 877.00 4.30 295.00 317.30 322.50 (5.20) 5.20 -2% 2% 27.07

Q 1 320.00 174.00 103.80 910.80 3.10 174.80 281.08 322.40 (41.32) 41.32 -15% 15% 1,707.34

Q 2 263.50 140.00 90.10 1,100.00 2.60 169.00 294.20 303.39 (9.19) 9.19 -3% 3% 84.36

Q 3 360.00 164.80 75.10 1,250.00 3.00 159.10 335.33 294.89 40.45 40.45 12% 12% 1,636.07

Q 4 400.00 145.50 72.90 1,500.00 2.50 135.00 375.98 312.14 63.84 63.84 17% 17% 4,075.55

Q 1 474.90 151.80 70.10 1,680.00 2.20 139.00 419.67 347.43 72.24 72.24 17% 17% 5,217.90

Q 2 503.90 169.90 70.00 1,940.50 2.30 195.00 480.27 389.70 90.57 90.57 19% 19% 8,203.23

Q 3 500.00 155.00 63.90 1,964.30 2.30 204.10 481.60 441.23 40.37 40.37 8% 8% 1,629.74

Q 4 480.10 147.50 56.00 2,242.00 2.20 195.10 520.48 468.81 51.67 51.67 10% 10% 2,669.79

2014 Q 1 500.78 (500.78) 500.78 250,775.60

Sum 9,377.43 8,910.80 184.29 2,489.27 -109% 1027% 485,070.47

N 40 38 38 38 37 37 38




Mean Squire Error 12,765.01


2010

2011

2012

2013

2004

2005

2006

2007

2008

2009

22

Figure 4.3.1

-

500.00

1,000.00

1,500.00

2,000.00

2,500.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er

Shar

e

Beverage Industry

Ceylon Brewery

Cargills

Keells Food

Nestle

Raigam Wayamba SalternsLimited

Soy Foods

Industry Average Quarter Price(Yt)


23

Figure 4.3.2

-

100.00

200.00

300.00

400.00

500.00

600.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er S

ha

re

Beverage Industry



24

4.4 Diversified holding industry

Share prices of diversified holding industry were examined and tabulated (Refer table 4.4.1)

to forecasting the share prices for the first quarter of 2014. There were ten listed quoted

companies namely Ceylinco Housing, Expolanka Holdings Limited, Harischandra, Hayleys,

Hemas, John Keells Holding, John Keells, Richard Pieris, Softlogic Holdings Ltd, and

Sunshine Holding were identified and selected to represent the diversified holding industry

over last ten years. Quarterly share prices were derived based on the average daily share

prices published in the Colombo Stock Exchange web site.


diversified holding industry average share price was continuously decreasing from the fourth

quarter of 2012 to fourth quarter of 2013. (I.e. Rs. 318.39 to Rs. 283.24) (Refer table 4.4.1).

Based on the weighted moving average forecasting method, the forecasted share prices for

the first quarter of 2014 would be Rs. 284.44 which is below than the latest quarter share

price of Rs. 292.62 in the fourth quarter of 2013 (Refer figure 4.4.1 and 4.4.2).



accuracy level of forecasting technique. Therefore, as industry wise, diversified holding

industry is one of share price decline industry which required taking the prudent decision

whether to invest, hold or divest the investment made in the diversified holding industry.

However, it was noted that the share prices of individual companies as well as the industry as

a whole have started to decline from the fourth quarter of 2012 to fourth quarter of 2013 and

thereafter forecasted that the share prices of whole industry would further be declined (Refer

figure 4.4.1 and 4.4.2).

When further analyzing of diversified holding industry, I could noted that Harischandra Plc

has reported the highest share price Rs. 2,990.00 in fourth quarter of 2011 (Refer table 4.4.1).

At the end of fourth quarter of 2013, Rs. 2,150.00 (Refer figure 4.4.1 and 4.4.2) average share

price was reported as the highest company share prices of the diversified holding industry.

However, when considering the each company separately in the diversified holding industry

all ten companies’ share prices which ware forecasted for the first quarter of 2014, it was

noted that the forecasted share price going to be further declined except Hayleys and Hemas

(i.e. these two companies’ forecasted share price going to be increased.) which required to be

taken the wise decisions by the investors who are existing and mainly the potential.

25

Table 4.4.1

Diversified Holdings Companies

Year Quarter

Ceylinco

Housing

Expolan

ka

Holdings

Limited

Harischa

ndra Hayleys Hemas

John

Keells

Holding

John

Keells

Richard

Pieris

Softlogic

Holdings

Ltd

Sunshine

Holding

Industry

Average

Quarter

Price (Yt)

Forecaste

d Share


(Yt -

Y^t) /

Actual

%

Absolute

% (Yt - Y^t) ^2

Q 1 9.75 - 162.25 115.00 88.25 111.00 130.00 93.00 - 24.00 91.66

Q 2 11.00 - 185.00 131.50 91.00 107.50 134.75 95.00 - 41.75 99.69

Q 3 14.00 - 350.00 121.00 90.00 106.00 135.00 102.50 - 95.00 126.69

Q 4 19.00 - 308.00 126.00 96.75 110.00 125.00 120.00 - 70.00 121.84 111.58 10.26 10.26 8% 8% 105.32

Q 1 38.75 - 398.00 112.50 109.00 137.50 145.00 165.00 - 75.75 147.69 118.87 28.82 28.82 20% 20% 830.70

Q 2 32.00 - 270.00 119.00 103.00 128.75 92.00 172.00 - 80.00 124.59 135.73 (11.14) 11.14 -9% 9% 124.11

Q 3 75.00 - 357.00 133.00 130.00 174.00 130.00 103.00 - 150.00 156.50 130.97 25.53 25.53 16% 16% 651.69

Q 4 32.00 - 375.00 97.00 104.00 130.00 90.00 67.75 - 95.00 123.84 145.17 (21.32) 21.32 -17% 17% 454.62

Q 1 47.00 - 330.00 98.50 110.75 158.00 100.00 75.00 - 155.00 134.28 133.79 0.49 0.49 0% 0% 0.24

Q 2 44.00 - 375.00 88.00 103.00 132.00 83.50 63.00 - 127.00 126.94 135.59 (8.66) 8.66 -7% 7% 74.93

Q 3 53.00 - 400.00 108.25 107.75 136.75 95.00 74.50 - 150.00 140.66 128.52 12.13 12.13 9% 9% 147.24

Q 4 36.25 - 330.00 131.00 119.00 195.00 89.00 78.00 - 165.00 142.91 135.27 7.64 7.64 5% 5% 58.38

Q 1 31.75 - 400.00 142.00 107.00 155.00 85.25 65.00 - 125.00 138.88 139.04 (0.16) 0.16 0% 0% 0.03

Q 2 27.50 - 425.00 132.00 102.50 145.50 80.50 54.25 - 125.00 136.53 140.44 (3.91) 3.91 -3% 3% 15.28

Q 3 36.25 - 410.00 112.50 100.25 129.00 78.00 39.75 - 126.00 128.97 138.51 (9.54) 9.54 -7% 7% 91.02

Q 4 32.00 - 425.00 107.75 95.00 127.25 96.00 47.50 - 172.25 137.84 133.22 4.63 4.63 3% 3% 21.39

Q 1 31.25 - 450.00 97.75 87.50 119.50 90.00 39.00 - 160.00 134.38 134.92 (0.54) 0.54 0% 0% 0.30

Q 2 26.50 - 450.00 135.75 81.00 110.00 94.75 41.25 - 130.00 133.66 134.33 (0.68) 0.68 -1% 1% 0.46

Q 3 24.25 - 455.00 129.00 78.00 86.50 80.00 43.50 - 145.00 130.16 134.71 (4.55) 4.55 -3% 3% 20.73

Q 4 12.00 - 450.00 86.00 55.25 50.00 60.00 22.50 - 120.00 106.97 132.05 (25.08) 25.08 -23% 23% 629.07

Q 1 8.00 - 476.25 90.00 60.25 62.75 62.00 25.00 - 196.00 122.53 119.26 3.27 3.27 3% 3% 10.68

Q 2 28.25 - 750.00 132.00 95.00 136.75 92.75 39.00 - 162.25 179.50 119.39 60.11 60.11 33% 33% 3,613.51

Q 3 31.25 - 750.00 154.00 130.00 151.00 152.00 41.00 - 150.00 194.91 147.90 47.00 47.00 24% 24% 2,209.29

Q 4 21.25 - 755.00 171.00 122.75 171.50 153.00 39.00 - 155.00 198.56 175.81 22.75 22.75 11% 11% 517.70

Q 1 19.00 - 941.75 225.00 120.00 184.00 194.50 55.00 - 325.00 258.03 193.65 64.38 64.38 25% 25% 4,144.54

Q 2 25.75 - 941.75 305.00 184.25 205.00 239.00 88.00 - 54.50 255.41 227.57 27.84 27.84 11% 11% 775.10

Q 3 26.70 - 1,000.00 349.50 50.20 319.50 206.50 168.00 - 55.00 271.93 244.83 27.10 27.10 10% 10% 734.41

Q 4 20.80 - 950.00 345.00 11.50 298.40 204.50 10.50 - 45.90 235.83 264.19 (28.37) 28.37 -12% 12% 804.61

Q 1 20.00 13.70 1,050.00 382.10 46.00 285.60 185.20 13.60 24.60 42.10 206.29 250.57 (44.28) 44.28 -21% 21% 1,960.83

Q 2 19.10 12.70 1,900.10 379.60 44.60 201.00 205.00 12.00 23.00 43.00 284.01 228.28 55.73 55.73 20% 20% 3,106.11

Q 3 23.00 12.00 2,400.00 375.00 39.00 205.90 86.20 10.20 22.10 38.00 321.14 251.06 70.08 70.08 22% 22% 4,911.63

Q 4 18.60 9.00 2,990.00 375.00 33.00 170.20 75.00 9.00 18.00 29.00 372.68 287.03 85.65 85.65 23% 23% 7,335.75

Q 1 14.60 6.20 2,199.00 360.00 26.30 206.00 66.20 7.50 11.20 20.00 291.70 339.48 (47.78) 47.78 -16% 16% 2,283.31

Q 2 11.90 6.00 2,400.00 337.00 22.10 182.80 59.40 6.70 10.20 25.00 306.11 321.88 (15.77) 15.77 -5% 5% 248.76

Q 3 20.40 7.70 2,226.80 319.40 30.50 229.10 70.50 8.90 12.00 31.00 295.63 315.10 (19.47) 19.47 -7% 7% 379.12

Q 4 15.90 7.10 2,499.50 304.70 26.60 219.40 64.50 7.80 10.80 27.60 318.39 297.99 20.40 20.40 6% 6% 416.24

Q 1 14.50 6.80 2,488.00 298.70 27.00 247.00 61.30 6.60 10.40 26.60 318.69 309.11 9.58 9.58 3% 3% 91.85

Q 2 13.30 6.90 2,000.00 306.30 34.50 251.30 83.80 6.90 9.90 34.50 274.74 313.99 (39.25) 39.25 -14% 14% 1,540.41

Q 3 10.70 6.80 2,250.00 290.00 32.00 218.00 75.00 6.50 8.70 31.40 292.91 296.66 (3.75) 3.75 -1% 1% 14.03

Q 4 10.20 7.50 2,150.00 305.00 33.00 215.00 68.30 6.40 8.40 28.60 283.24 292.62 (9.38) 9.38 -3% 3% 87.89

2014 Q 1 284.44 (284.44) 284.44 80,906.68

Sum 7,866.87 7,543.50 5.34 1,161.48 102% 405% 119,317.97

N 40 38 38 38 37 37 38


Mean Percentage Error 0.03




2010

2011

2012

2013

2004

2005

2006

2007

2008

2009

26

Figure 4.4.1

-

500.00

1,000.00

1,500.00

2,000.00

2,500.00

3,000.00

3,500.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er S

hare

Diversified Holding Companies

Ceylinco Housing

Expolanka HoldingsLimitedHarischandra

Hayleys

Hemas

John Keells Holding

John Keells

Richard Pieris

Softlogic Holdings Ltd

Sunshine Holding

Industry Average QuarterPrice (Yt)Forecasted Share Price

27

Figure 4.4.2

-

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er S

hare

Diversified Holding Companies

IndustryAverageQuarter Price(Yt)

ForecastedShare Price

28

4.5 Finance and investment industry

Share prices of finance and investment industry were examined and tabulated (Refer table

4.5.1) to forecasting the share prices for the first quarter of 2014. There were twenty two

listed quoted companies mainly including namely Arpico Finance, Central Finance, LB

Finance, LOLC, HDFC, First Capital Holdings, and The Finance Co were identified and

selected to represent the finance and investment industry over last ten years. Quarterly share

prices were derived based on the average daily share prices published in the Colombo Stock

Exchange web site.

According to the selected forecasting technique of weighted moving average method, finance

and investment industry average share price was continuously decreasing from the second







accuracy level of forecasting technique. Therefore, as industry wise, finance and investment


whether to invest, hold or divest the investment made in the finance and investment industry.


a whole have started to decline from the first quarter of 2011 to fourth quarter of 2013 and


figure 4.5.1 and 4.5.2).

When further analyzing of finance and investment industry, I could noted that HDFC Plc has

reported the highest share price Rs. 1795.30 in second quarter of 2011 (Refer table 4.5.1). At

the end of fourth quarter of 2013, Rs. 29.00 (Refer figure 4.5.1 and 4.5.2) average share price

was reported as the highest company share prices of the finance and investment industry.

However, when considering the each company separately in the finance and investment

industry all twenty two companies’ share prices which ware forecasted for the first quarter of

2014, it was noted that the forecasted share price going to be further declined except First

Capital Holdings and LOLC (i.e. these two companies’ forecasted share price going to be

increased.) which required to be taken the wise decisions by the investors.

29

Table 4.5.1

Finance & Investment Industry

Year Quarter

Asia

Asset

Finance

Limited

Asia

Capital

Abans

Financial

Services

Ltd

Arpico

Finance

Browns

Investm

ents Ltd

Capital

Alliance

Finance

Ltd

Citizens

Develop

ment

Busines

s

Finance

Central

Finance

Chilaw

Finance

Limited

First

Capital

Holdings

Ceylon

Inv

Commer

cial

Credit

Ltd HDFC

LB

Finance

Lanka

Orix

Finance

Co. Ltd LOLC

Softlogic

Capital

Limited

Singer

Finance

(Lanka)

Ltd

Sinhaput

hra

Finance

Limited

Swarnam

ahal

Financial

Services

Limited

The

Finance

Co

Vallibel

Finance

Limited

Industry

Average

Quarter

Price (Yt)

Forecaste

d Share


(Yt -

Y^t) /

Actual

%

Absolute

% (Yt - Y^t) ^2

Q 1 - 18.00 - 14.25 - - - 224.00 - 4.75 160.00 - 195.00 14.00 - 62.00 - - - - 17.00 - 78.78

Q 2 - 16.50 - 25.75 - - - 269.00 - 5.75 223.00 - 195.00 12.75 - 69.00 - - - - 17.50 - 92.69

Q 3 - 14.75 - 26.75 - - - 235.25 - 6.50 86.25 - 195.00 15.00 - 72.00 - - - - 20.00 - 74.61

Q 4 - 13.00 - 24.75 - - - 270.00 - 5.75 90.00 - 285.00 43.75 - 80.00 - - - - 19.00 - 92.36 80.87 11.49 11.49 12% 12% 132.06

Q 1 - 19.50 - 40.00 - - - 147.00 - 7.50 101.00 - 277.00 50.00 - 85.00 - - - - 56.50 - 87.06 87.10 (0.05) 0.05 0% 0% 0.00

Q 2 - 15.00 - 65.00 - - - 143.00 - 6.25 79.00 - 240.00 45.00 - 94.00 - - - - 46.00 - 81.47 86.16 (4.69) 4.69 -6% 6% 21.96

Q 3 - 15.75 - 85.00 - - - 202.00 - 6.50 112.00 - 190.00 90.00 - 102.00 - - - - 61.50 - 96.08 85.33 10.76 10.76 11% 11% 115.74

Q 4 - 12.00 - 60.00 - - - 152.00 - 4.50 67.00 - 180.00 70.00 - 101.00 - - - - 34.50 - 75.67 89.89 (14.23) 14.23 -19% 19% 202.43

Q 1 - 15.25 - 80.00 - - - 205.00 - 8.50 81.25 - 168.00 85.00 - 102.00 - - - - 60.25 - 89.47 82.95 6.52 6.52 7% 7% 42.50

Q 2 - 12.25 - 78.00 - - - 175.00 - 10.00 63.00 - 171.00 80.00 - 94.00 - - - - 50.00 - 81.47 86.65 (5.18) 5.18 -6% 6% 26.84

Q 3 - 13.75 - 104.50 - - - 190.00 - 9.50 78.75 - 176.00 61.00 - 99.75 - - - - 57.00 - 87.81 82.71 5.09 5.09 6% 6% 25.95

Q 4 - 15.50 - 95.00 - - - 231.00 - 14.50 95.00 - 162.00 39.50 - 103.00 - - - - 54.00 - 89.94 86.24 3.71 3.71 4% 4% 13.73

Q 1 - 14.00 - 90.00 - - - 235.00 - 17.50 101.00 - 164.25 35.25 - 110.00 - - - - 47.75 - 90.53 87.61 2.92 2.92 3% 3% 8.52

Q 2 - 13.50 - 80.00 - - - 209.50 - 14.50 80.00 - 142.00 29.00 - 102.00 - - - - 48.00 - 79.83 89.81 (9.98) 9.98 -12% 12% 99.50

Q 3 - 13.75 - 80.00 - - - 200.00 - 15.00 85.50 - 128.00 39.00 - 102.25 - - - - 62.00 - 80.61 85.06 (4.45) 4.45 -6% 6% 19.83

Q 4 - 11.50 - 79.50 - - - 199.00 - 11.25 84.50 - 119.75 20.75 - 136.50 - - - - 60.50 - 80.36 82.36 (2.00) 2.00 -2% 2% 4.00

Q 1 - 10.25 - 56.00 - - - 200.00 - 10.25 78.00 - 110.25 22.50 - 117.75 - - - - 63.00 - 74.22 80.33 (6.11) 6.11 -8% 8% 37.31

Q 2 - 9.00 - 62.00 - - - 227.00 - 10.25 81.00 - 90.25 20.25 - 112.50 - - - - 52.00 - 73.81 77.34 (3.54) 3.54 -5% 5% 12.50

Q 3 - 9.75 - 65.00 - - - 195.25 - 9.75 75.00 - 56.00 20.00 - 99.00 - - - - 49.00 - 64.31 75.24 (10.94) 10.94 -17% 17% 119.60

Q 4 - 5.25 - 30.00 - - - 165.00 - 5.00 45.00 - 50.75 15.50 - 58.00 - - - - 27.25 - 44.64 69.14 (24.50) 24.50 -55% 55% 600.25

Q 1 - 5.75 - 33.00 - - - 157.00 - 9.75 58.00 - 85.00 19.00 - 69.25 - - - - 22.00 - 50.97 56.37 (5.40) 5.40 -11% 11% 29.16

Q 2 - 7.50 - 41.50 - - - 234.00 - 13.25 95.00 - 157.00 39.50 - 105.00 - - - - 26.00 - 79.86 51.74 28.12 28.12 35% 35% 790.86

Q 3 - 8.00 - 41.75 - - - 300.00 - 15.00 170.00 - 147.75 37.75 - 130.00 - - - - 27.25 - 97.50 64.15 33.35 33.35 34% 34% 1,112.22

Q 4 - 10.25 - 45.00 - - - 317.50 - 27.00 247.50 - 143.00 46.50 - 137.00 - - - - 19.25 - 110.33 82.90 27.43 27.43 25% 25% 752.44

Q 1 - 13.00 - 64.50 - - 56.10 390.00 - 58.00 271.00 - 281.25 62.00 - 165.00 - - 106.00 - 17.50 - 134.94 100.39 34.55 34.55 26% 26% 1,193.84

Q 2 - 28.75 - 84.50 - - 46.30 499.25 - 19.75 300.50 - 436.40 146.25 - 286.25 - - 77.00 - 22.00 39.25 165.52 120.07 45.45 45.45 27% 27% 2,065.36

Q 3 - 45.40 - 143.30 - - 47.30 902.70 - 19.10 624.90 - 550.00 291.60 - 1,439.90 - - 81.80 - 63.70 89.90 358.30 145.31 212.99 212.99 59% 59% 45,365.90

Q 4 - 47.00 - 110.00 - - 52.50 818.50 - 19.00 121.80 - 1,125.90 261.90 - 127.80 - - 76.00 - 38.90 83.10 240.20 255.79 (15.59) 15.59 -6% 6% 243.15

Q 1 - 87.80 65.20 114.70 5.00 39.20 81.20 1,273.70 22.20 22.10 151.00 30.90 1,480.00 175.10 10.80 119.60 47.30 36.50 91.00 40.00 37.00 49.50 189.51 260.69 (71.18) 71.18 -38% 38% 5,066.46

Q 2 - 105.20 81.00 109.90 4.80 36.70 81.00 1,389.00 27.70 21.00 129.10 28.70 1,795.30 176.90 10.80 100.30 35.20 29.80 101.00 71.00 29.60 44.50 209.93 238.48 (28.55) 28.55 -14% 14% 815.02

Q 3 - 87.00 70.00 135.00 4.90 36.10 70.10 267.10 25.70 18.50 120.30 31.00 1,400.30 156.30 9.00 98.80 35.00 33.10 121.00 76.50 42.20 44.20 137.24 209.86 (72.62) 72.62 -53% 53% 5,273.04

Q 4 - 64.40 67.90 119.90 4.20 36.50 65.00 203.00 22.40 16.10 110.00 23.70 68.40 138.60 8.10 83.30 34.80 27.00 102.00 93.00 40.50 43.30 65.34 169.50 (104.16) 104.16 -159% 159% 10,850.30

Q 1 3.90 37.50 40.50 93.00 3.30 37.80 40.50 171.00 14.90 11.00 78.10 16.00 60.30 134.90 4.50 54.00 16.20 16.20 88.90 150.00 30.10 38.80 51.88 115.83 (63.95) 63.95 -123% 123% 4,089.07

Q 2 2.90 31.00 34.10 85.10 2.70 22.20 36.60 128.60 14.40 10.00 69.00 14.50 65.50 121.20 3.50 37.00 6.30 12.30 80.00 6.90 23.50 31.50 38.13 72.99 (34.86) 34.86 -91% 91% 1,215.47

Q 3 3.20 34.60 38.50 90.00 4.00 27.40 42.80 180.00 19.00 15.00 102.80 16.80 50.80 150.40 4.60 50.50 7.00 15.90 88.30 5.10 27.90 40.00 46.12 47.70 (1.58) 1.58 -3% 3% 2.49

Q 4 2.60 30.30 38.60 69.50 4.00 20.10 41.00 160.00 14.00 12.30 84.00 16.30 40.00 148.00 3.80 53.90 7.10 13.70 82.00 3.10 18.70 31.10 40.64 44.87 (4.23) 4.23 -10% 10% 17.92

Q 1 2.20 22.80 29.00 92.00 3.30 14.30 40.10 180.00 10.40 11.20 80.00 12.90 40.00 132.70 3.30 57.00 5.60 12.60 73.50 3.20 12.60 28.30 39.41 41.78 (2.37) 2.37 -6% 6% 5.63

Q 2 2.30 25.70 32.60 103.90 3.00 18.50 47.50 182.00 13.30 18.90 93.60 13.10 28.00 127.20 3.10 60.20 5.90 13.00 73.20 2.40 13.00 31.30 41.44 41.12 0.32 0.32 1% 1% 0.10

Q 3 2.20 21.00 31.50 93.50 2.60 15.50 41.00 185.50 12.80 14.80 77.00 10.80 29.50 109.90 3.00 58.20 3.50 11.20 90.00 1.90 8.60 30.00 38.82 40.67 (1.85) 1.85 -5% 5% 3.43

Q 4 1.80 17.60 30.00 93.00 2.30 14.90 41.10 175.10 12.70 16.50 76.00 10.40 29.00 100.00 2.80 70.40 3.80 11.70 80.10 2.10 8.80 30.00 37.73 39.72 (1.99) 1.99 -5% 5% 3.97

2014 Q 1 38.80 (38.80) 38.80 1,505.40

Sum 3,789.54 3,653.54 (110.08) 955.49 -410% 913% 81,883.96

N 0 40 38 38 38 37 37 38






2010

2011

2012

2013

2004

2005

2006

2007

2008

2009

30

Figure 4.5.1

-

200.00

400.00

600.00

800.00

1,000.00

1,200.00

1,400.00

1,600.00

1,800.00

2,000.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er S

ha

re

Finance and Investment Industry Asia Asset Finance Limited

Asia Capital

Abans Financial Services Ltd

Arpico Finance

Browns Investments Ltd

Capital Alliance Finance Ltd

Citizens Development Business Finance

Central Finance

Chilaw Finance Limited

First Capital Holdings

Ceylon Inv

Commercial Credit Ltd

HDFC

LB Finance

Lanka Orix Finance Co. Ltd

LOLC

Softlogic Capital Limited

Singer Finance (Lanka) Ltd

Sinhaputhra Finance Limited

Swarnamahal Financial Services Limited

The Finance Co

Vallibel Finance Limited



31

Figure 4.5.2

-

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce P

er S

ha

re

Finance & Investment Industry



32

4.6 Footwear and textile industry

Share prices of footwear and textile industry were examined and tabulated (Refer table 4.6.1)

to forecasting the share prices for the first quarter of 2014. There were four listed quoted

companies namely Ceylon Leather, Kuruwita Textile, ODEL, and Orient Garments Ltd were

identified and selected to represent the footwear and textile industry over last ten years.

Quarterly share prices were derived based on the average daily share prices published in the

Colombo Stock Exchange web site.


footwear and textile industry average share price was continuously decreasing from the

second quarter of 2010 to fourth quarter of 2013. (I.e. Rs. 102.00 to Rs. 26.85) (Refer table

4.6.1). Based on the weighted moving average forecasting method, the forecasted share prices

for the first quarter of 2014 would be Rs. 28.12 which is below than the latest quarter share




accuracy level of forecasting technique. Therefore, as industry wise, footwear and textile

industry is one of share price decline industry which required to take the prudent decision

whether to invest, hold or divest the investment made in the footwear and textile industry.


a whole have started to decline from the second quarter of 2010 to fourth quarter of 2013 and


figure 4.6.1 and 4.6.2).

When further analyzing of footwear and textile industry, I could noted that Ceylon Leather

has reported the highest share price Rs. 234.00 in second quarter of 2010 (Refer table 4.6.1).

At the end of fourth quarter of 2013, Rs. 62.50 (Refer figure 4.6.1 and 4.6.2) average share

price was reported as the highest company share prices of the footwear and textile industry.

However, when considering the each company separately in the footwear and textile industry

all four companies’ share prices which ware forecasted for the first quarter of 2014, it was

noted that the forecasted share price going to be further declined except Orient Garments Ltd

(i.e. this company’s forecasted share price going to be increased.) which required to be taken

the wise decisions by the investors who are existing and mainly the potential.

33

Table 4.6.1

Footwear & Textile Industry

Year Quarter

Ceylon

Leather

Kuruwit

a Textile ODEL

Orient

Garment

s Ltd

Industry

Average

Quarter

Price (Yt)

Forecaste

d Share


(Yt -

Y^t) /

Actual

%

Absolute

% (Yt - Y^t) ^2

Q 1 7.25 32.25 - - 19.75

Q 2 8.75 40.25 - - 24.50

Q 3 8.50 49.75 - - 29.13

Q 4 7.75 48.75 - - 28.25 25.86 2.39 2.39 8% 8% 5.70

Q 1 15.00 55.00 - - 35.00 27.76 7.24 7.24 21% 21% 52.38

Q 2 18.25 50.00 - - 34.13 31.80 2.33 2.33 7% 7% 5.41

Q 3 16.75 45.00 - - 30.88 33.21 (2.34) 2.34 -8% 8% 5.46

Q 4 10.50 40.00 - - 25.25 32.68 (7.43) 7.43 -29% 29% 55.13

Q 1 22.50 53.00 - - 37.75 28.71 9.04 9.04 24% 24% 81.68

Q 2 15.50 42.00 - - 28.75 32.63 (3.88) 3.88 -13% 13% 15.02

Q 3 17.00 51.00 - - 34.00 30.75 3.25 3.25 10% 10% 10.56

Q 4 18.00 56.00 - - 37.00 33.18 3.83 3.83 10% 10% 14.63

Q 1 21.50 58.00 - - 39.75 34.45 5.30 5.30 13% 13% 28.09

Q 2 23.75 47.00 - - 35.38 37.78 (2.40) 2.40 -7% 7% 5.76

Q 3 39.25 42.50 - - 40.88 37.01 3.86 3.86 9% 9% 14.92

Q 4 76.75 43.00 - - 59.88 39.00 20.88 20.88 35% 35% 435.77

Q 1 68.00 40.00 - - 54.00 49.28 4.72 4.72 9% 9% 22.33

Q 2 68.75 37.50 - - 53.13 53.14 (0.01) 0.01 0% 0% 0.00

Q 3 63.00 34.25 - - 48.63 54.74 (6.11) 6.11 -13% 13% 37.36

Q 4 47.75 20.75 - - 34.25 51.05 (16.80) 16.80 -49% 49% 282.24

Q 1 50.00 24.75 - - 37.38 42.34 (4.96) 4.96 -13% 13% 24.63

Q 2 52.25 33.25 - - 42.75 38.69 4.06 4.06 10% 10% 16.50

Q 3 62.00 32.75 - - 47.38 39.44 7.94 7.94 17% 17% 63.00

Q 4 56.00 35.50 - - 45.75 43.99 1.76 1.76 4% 4% 3.11

Q 1 87.75 40.00 30.70 - 52.82 45.64 7.18 7.18 14% 14% 51.54

Q 2 234.00 39.50 32.50 - 102.00 49.61 52.39 52.39 51% 51% 2,744.89

Q 3 129.20 37.00 32.40 - 66.20 76.00 (9.80) 9.80 -15% 15% 95.94

Q 4 92.60 30.00 36.40 - 53.00 74.26 (21.26) 21.26 -40% 40% 452.13

Q 1 90.00 28.50 38.20 25.90 45.65 66.76 (21.11) 21.11 -46% 46% 445.63

Q 2 95.30 27.20 36.50 34.60 48.40 51.97 (3.57) 3.57 -7% 7% 12.71

Q 3 84.70 29.00 35.40 31.40 45.13 48.50 (3.37) 3.37 -7% 7% 11.36

Q 4 99.60 23.90 32.30 31.10 46.73 46.21 0.51 0.51 1% 1% 0.26

Q 1 91.90 25.70 19.80 18.70 39.03 46.58 (7.56) 7.56 -19% 19% 57.08

Q 2 79.50 24.50 17.60 13.30 33.73 42.56 (8.83) 8.83 -26% 26% 77.97

Q 3 89.90 26.00 25.00 18.90 39.95 37.92 2.04 2.04 5% 5% 4.14

Q 4 77.90 20.30 19.70 14.20 33.03 37.90 (4.87) 4.87 -15% 15% 23.74

Q 1 62.30 22.00 21.00 7.90 28.30 35.24 (6.94) 6.94 -25% 25% 48.20

Q 2 74.10 22.30 22.10 7.60 31.53 32.05 (0.52) 0.52 -2% 2% 0.27

Q 3 68.50 18.20 19.20 6.00 27.98 30.86 (2.88) 2.88 -10% 10% 8.31

Q 4 62.50 18.00 19.00 7.90 26.85 29.11 (2.26) 2.26 -8% 8% 5.09

2014 Q 1 28.12 (28.12) 28.12 790.88

Sum 1,623.79 1,576.72 (26.31) 303.72 -106% 601% 6,009.80

N 40 38 38 38 37 37 38






2010

2011

2012

2013

2004

2005

2006

2007

2008

2009

34

Figure 4.6.1

-

50.00

100.00

150.00

200.00

250.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er S

ha

re

Footwear and Textile Industry

Ceylon Leather

Kuruwita Textile

ODEL

Orient GarmentsLtd



35

Figure 4.6.2

-

20.00

40.00

60.00

80.00

100.00

120.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er S

ha

re

Footwear and Textile Industry



36

4.7 Health care industry

Share prices of health care industry were examined and tabulated (Refer table 4.7.1) to

forecasting the share prices for the first quarter of 2014. There were six listed quoted

companies namely Asiri Surgical, Asiri Hospitals Limited, Durdens, Lanka Hospitals,

Nawaloka Hospitals, and COL Pharmacy were identified and selected to represent the health

care industry over last ten years. Quarterly share prices were derived based on the average

daily share prices published in the Colombo Stock Exchange web site.

According to the selected forecasting technique of weighted moving average method, health

care industry average share price was continuously decreasing from the first quarter of 2011

to fourth quarter of 2013. (i.e. Rs. 604.30 to Rs. 107.47) (Refer table 4.7.1). Based on the


quarter of 2014 would be Rs. 111.23 which is below than the latest quarter share price of




accuracy level of forecasting technique. Therefore, as industry wise, health care industry is


invest, hold or divest the investment made in the health care industry. However, it was noted


decline from the first quarter of 2011 to fourth quarter of 2013 and thereafter forecasted that

the share prices of whole industry would further be declined (Refer figure 4.7.1 and 4.7.2).

When further analyzing of health care industry, I could noted that COL Pharmacy has

reported the highest share price Rs. 3,460.10 in first quarter of 2011 (Refer table 4.7.1). At

the end of fourth quarter of 2013, Rs. 465.10 (Refer figure 4.7.1 and 4.7.2) average share

price was reported as the highest company share prices of the health care industry. However,

when considering the each company separately in the health care industry all six companies’

share prices which ware forecasted for the first quarter of 2014, it was noted that the

forecasted share price going to be further declined except Asiri Hospitals Limited, Durdens,

Lanka Hospitals (i.e. these three companies’ forecasted share price going to be increased.)

which required to be taken the wise decisions by the investors who have invested and

potential investors of health care industry mainly the foreign investors.

37

Table 4.7.1

Health Care Industry

Year Quarter

Asiri

Surgical

Asiri

Hospitals

Limited Durdens

Lanka

Hospitals

Nawaloka

Hospitals

COLPha

rmacy

Industry

Average

Quarter

Price (Yt)

Forecaste

d Share


(Yt -

Y^t) /

Actual

%

Absolute

% (Yt - Y^t) ^2

Q 1 25.50 29.00 20.00 10.25 31.50 200.00 52.71

Q 2 24.75 32.00 24.00 10.75 42.50 169.00 50.50

Q 3 25.00 37.00 25.00 12.50 37.00 150.00 47.75

Q 4 25.00 36.00 23.00 12.75 3.25 175.00 45.83 49.57 (3.73) 3.73 -8% 8% 13.94

Q 1 35.00 37.00 27.25 15.50 7.00 199.00 53.46 47.34 6.12 6.12 11% 11% 37.41

Q 2 3.00 38.00 31.25 19.50 3.75 210.00 50.92 50.03 0.89 0.89 2% 2% 0.79

Q 3 3.25 48.00 42.75 27.00 3.75 200.00 54.13 50.66 3.46 3.46 6% 6% 11.99

Q 4 3.00 50.00 30.00 18.50 2.50 185.00 48.17 53.03 (4.86) 4.86 -10% 10% 23.64

Q 1 3.00 60.00 44.75 21.50 2.50 190.00 53.63 50.50 3.12 3.12 6% 6% 9.74

Q 2 4.00 62.00 39.00 21.00 2.30 195.00 53.88 52.09 1.80 1.80 3% 3% 3.23

Q 3 6.25 70.00 46.50 27.75 3.40 195.00 58.15 52.66 5.49 5.49 9% 9% 30.11

Q 4 8.00 88.50 55.25 26.50 3.00 200.00 63.54 55.97 7.58 7.58 12% 12% 57.41

Q 1 11.00 65.00 56.25 27.00 2.70 200.00 60.33 59.99 0.33 0.33 1% 1% 0.11

Q 2 8.25 56.00 51.00 22.25 2.30 165.00 50.80 60.86 (10.06) 10.06 -20% 20% 101.10

Q 3 10.00 72.50 54.50 23.50 2.60 175.25 56.39 56.21 0.19 0.19 0% 0% 0.03

Q 4 10.25 80.75 53.75 17.00 2.30 230.00 65.68 55.50 10.17 10.17 15% 15% 103.51

Q 1 7.50 58.25 58.00 16.00 2.70 236.00 63.08 59.92 3.16 3.16 5% 5% 9.99

Q 2 7.75 55.00 55.00 16.25 2.40 268.50 67.48 62.52 4.97 4.97 7% 7% 24.65

Q 3 7.00 50.50 56.00 16.25 2.40 225.25 59.57 65.80 (6.23) 6.23 -10% 10% 38.84

Q 4 5.75 49.25 44.75 12.00 1.80 225.50 56.51 62.64 (6.14) 6.14 -11% 11% 37.64

Q 1 6.75 55.00 53.00 14.75 1.70 225.00 59.37 59.62 (0.25) 0.25 0% 0% 0.06

Q 2 9.00 69.50 70.00 19.25 2.60 225.00 65.89 58.55 7.34 7.34 11% 11% 53.91

Q 3 10.00 68.00 80.25 20.25 3.20 300.00 80.28 62.06 18.23 18.23 23% 23% 332.18

Q 4 11.00 10.25 80.25 19.00 3.10 300.00 70.60 71.78 (1.18) 1.18 -2% 2% 1.40

Q 1 9.50 9.00 120.00 19.25 3.50 403.50 94.13 72.56 21.56 21.56 23% 23% 464.91

Q 2 9.25 9.00 109.25 22.50 7.50 400.00 92.92 84.30 8.62 8.62 9% 9% 74.26

Q 3 9.10 8.90 110.90 37.80 8.40 2,550.00 454.18 88.82 365.37 365.37 80% 80% 133,493.41

Q 4 8.70 8.80 102.00 31.70 3.70 1,825.00 329.98 273.79 56.19 56.19 17% 17% 3,157.50

Q 1 8.50 8.40 100.00 44.80 4.00 3,460.10 604.30 319.83 284.47 284.47 47% 47% 80,923.18

Q 2 7.90 8.20 97.10 39.90 4.00 2,295.00 408.68 491.98 (83.30) 83.30 -20% 20% 6,938.61

Q 3 8.30 9.90 91.90 63.00 4.10 1,700.00 312.87 451.63 (138.76) 138.76 -44% 44% 19,254.80

Q 4 7.90 8.60 85.00 52.10 3.90 1,190.00 224.58 399.90 (175.32) 175.32 -78% 78% 30,735.35

Q 1 7.90 7.60 72.50 32.60 3.10 768.00 148.62 287.89 (139.27) 139.27 -94% 94% 19,396.60

Q 2 7.30 7.70 80.50 30.60 3.00 602.50 121.93 204.26 (82.32) 82.32 -68% 68% 6,777.13

Q 3 8.40 11.50 90.00 50.60 3.40 625.20 131.52 150.47 (18.95) 18.95 -14% 14% 359.17

Q 4 9.20 11.10 91.10 39.30 3.00 489.00 107.12 132.06 (24.95) 24.95 -23% 23% 622.25

Q 1 9.30 11.40 100.00 35.00 2.90 460.10 103.12 117.40 (14.28) 14.28 -14% 14% 204.01

Q 2 10.30 14.10 105.00 40.00 3.10 548.40 120.15 110.00 10.15 10.15 8% 8% 103.09

Q 3 10.20 14.80 110.00 39.90 3.00 491.50 111.57 112.43 (0.87) 0.87 -1% 1% 0.75

Q 4 9.90 15.80 110.00 41.20 2.80 465.10 107.47 112.45 (4.99) 4.99 -5% 5% 24.85

2014 Q 1 111.23 (111.23) 111.23 12,372.85

Sum 4,861.75 4,718.29 (7.50) 1,645.89 -125% 720% 315,794.42

N 40 38 38 38 37 37 38






2010

2011

2012

2013

2004

2005

2006

2007

2008

2009

38

Figure 4.7.1

-

500.00

1,000.00

1,500.00

2,000.00

2,500.00

3,000.00

3,500.00

4,000.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pric

e p

er S

ha

re

Healthcare Industry

Asiri Surgical

Asiri Hospitals Limited

Durdens

Lanka Hospitals

Nawaloka Hospitals

COLPharmacy

Industry Average QuarterPrice (Yt)


39

Figure 4.7.2

-

100.00

200.00

300.00

400.00

500.00

600.00

700.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er S

ha

re

Healthcare Industry

Industry AverageQuarter Price(Yt)


40

4.8 Hotel industry

Share prices of hotel industry were examined and tabulated (Refer table 4.8.1) to forecasting

the share prices for the first quarter of 2014. There were fifteen listed quoted companies

namely Aitken Spence Hotel Holdings, Browns Beach, Beruwala Resorts Limited, Beruwela

Walkinn, Hikkaduwa Beach Resort Limited, Kalpitiya Beach Resort, Waskaduwa Beach

Resort, Galadari, Hotel Sigiriya, Kandy Hotels, John Keels Hotels, Lighthouse Hotel,

Serendib Hotels, TAJ Lanka, and Tangerine were identified and selected to represent the

hotel industry over last ten years. Quarterly share prices were derived based on the average

daily share prices published in the Colombo Stock Exchange web site.

According to the selected forecasting technique of weighted moving average method, hotel

industry average share price was continuously decreasing from the third quarter of 2010 to

fourth quarter of 2013. (I.e. Rs. 158.01 to Rs. 30.53) (Refer table 4.8.1). Based on the






accuracy level of forecasting technique. Therefore, as industry wise, hotel industry is one of

share price decline industry which required taking the prudent decision whether to invest,

hold or divest the investment made in the hotel industry. However, it was noted that the share

prices of individual companies as well as the industry as a whole have started to decline from

the third quarter of 2010 to fourth quarter of 2013 and thereafter forecasted that the share

prices of whole industry would further be declined (Refer figure 4.8.1 and 4.8.2).

When further analyzing of hotel industry, I could noted that Aitken Spence Hotel Holdings

has reported the highest share price Rs. 729.10 in third quarter of 2010 (Refer table 4.8.1). At

the end of fourth quarter of 2013, Rs. 63.00 (Refer figure 4.8.1 and 4.8.2) average share price

was reported as the highest company share prices of the hotel industry. However, when

considering the each company separately in the hotel industry all fifteen companies’ share


share price going to be further declined except Browns Beach, Hikkaduwa Beach Resort

Limited, Waskaduwa Beach Resort, John Keels Hotels, Lighthouse Hotel, TAJ Lanka.

41

Table 4.8.1

Hotel Industry

Year Quarter

Aitken

Spence

Hotel

Holdings

Browns

Beach

Beruwal

a

Resorts

Limited

Beruwel

a

Walkinn

Hikkadu

wa

Beach

Resort

Limited

Kalpitiya

Beach

Resort

Waskad

uwa

Beach

Resort Galadari

Hotel

Sigiriya

Kandy

Hotels

John

Keels

Hotels

Lighthou

se Hotel

Serendib

Hotels

TAJ

Lanka

Tangerin

e

Industry

Average

Quarter

Price (Yt)

Forecaste

d Share


(Yt -

Y^t) /

Actual

%

Absolute

% (Yt - Y^t) ^2

Q 1 68.00 14.25 - 47.00 - - - 8.75 31.00 36.00 104.00 34.00 36.75 17.75 50.00 40.68

Q 2 73.00 14.50 - 52.00 - - - 8.75 42.00 35.00 98.00 36.00 50.00 16.00 55.00 43.66

Q 3 84.00 22.50 - 65.00 - - - 13.75 32.00 40.00 98.25 48.00 36.00 22.50 68.75 48.25

Q 4 91.00 31.25 - 70.00 - - - 16.00 38.00 38.75 87.00 48.00 42.00 19.50 52.00 48.50 45.36 3.14 3.14 6% 6% 9.87

Q 1 97.00 28.00 - 70.00 - - - 16.00 37.75 40.00 85.25 59.00 39.00 17.75 50.00 49.07 47.46 1.61 1.61 3% 3% 2.60

Q 2 93.00 23.00 - 69.00 - - - 15.00 40.00 39.50 83.75 60.00 40.00 18.00 60.00 49.20 48.73 0.47 0.47 1% 1% 0.22

Q 3 92.50 25.75 - 85.00 - - - 18.00 43.00 137.00 88.00 68.00 54.00 19.00 60.00 62.75 49.02 13.73 13.73 22% 22% 188.44

Q 4 68.00 23.00 - 57.00 - - - 11.25 33.00 73.00 85.00 60.00 45.00 12.00 34.00 45.57 55.95 (10.38) 10.38 -23% 23% 107.78

Q 1 85.00 35.25 - 70.00 - - - 12.75 37.00 78.50 81.00 59.00 47.75 14.25 52.75 52.11 51.45 0.66 0.66 1% 1% 0.44

Q 2 66.00 26.00 - 25.00 - - - 10.25 35.00 90.00 75.00 57.00 44.50 11.00 43.00 43.89 52.28 (8.39) 8.39 -19% 19% 70.41

Q 3 83.50 29.00 - 70.00 - - - 13.25 43.50 81.00 10.25 54.00 40.00 13.75 58.75 45.18 46.69 (1.51) 1.51 -3% 3% 2.28

Q 4 78.50 28.00 - 63.00 - - - 11.25 40.00 70.00 8.50 50.00 41.25 11.75 38.75 40.09 46.18 (6.09) 6.09 -15% 15% 37.07

Q 1 70.00 27.00 - 45.00 - - - 10.75 33.00 60.00 8.25 54.50 39.75 11.00 70.00 39.02 42.38 (3.35) 3.35 -9% 9% 11.25

Q 2 64.75 17.00 - 40.00 - - - 9.50 25.00 89.75 5.75 39.75 39.00 9.50 24.25 33.11 40.58 (7.46) 7.46 -23% 23% 55.67

Q 3 78.00 33.25 - 54.00 - - - 11.50 35.00 88.00 8.00 50.00 30.00 9.50 33.00 39.11 36.28 2.83 2.83 7% 7% 8.02

Q 4 67.75 31.75 - 62.00 - - - 9.50 35.00 85.00 7.00 48.00 27.00 8.00 29.50 37.32 37.30 0.02 0.02 0% 0% 0.00

Q 1 93.00 29.00 - 63.00 - - - 11.25 32.00 71.00 7.00 49.25 24.00 8.25 30.25 38.00 37.02 0.98 0.98 3% 3% 0.97

Q 2 87.25 26.00 - 78.50 - - - 11.25 24.00 66.50 6.75 39.75 23.50 8.00 25.00 36.05 38.02 (1.97) 1.97 -5% 5% 3.89

Q 3 116.25 29.25 - 63.00 - - - 9.25 26.25 73.25 7.00 47.75 40.25 10.00 31.00 41.20 36.89 4.32 4.32 10% 10% 18.65

Q 4 95.00 19.00 - 25.00 - - - 6.25 21.00 33.25 5.00 39.00 18.50 7.00 28.50 27.05 39.02 (11.97) 11.97 -44% 44% 143.29

Q 1 90.00 29.00 - 38.50 - - - 7.75 24.50 50.25 6.50 57.50 28.50 9.50 28.00 33.64 33.09 0.54 0.54 2% 2% 0.30

Q 2 145.00 41.25 - 59.00 - - - 12.50 44.00 92.00 12.25 70.00 47.00 16.75 45.50 53.20 33.17 20.03 20.03 38% 38% 401.27

Q 3 219.75 63.25 - 65.00 - - - 16.25 55.00 110.00 20.50 66.00 68.00 23.25 69.75 70.61 42.10 28.51 28.51 40% 40% 812.90

Q 4 269.25 66.00 - 62.50 - - - 15.00 53.75 113.25 22.50 70.00 66.25 23.25 65.25 75.18 58.00 17.19 17.19 23% 23% 295.37

Q 1 385.00 72.50 - 66.00 - - - 22.00 52.25 110.00 18.50 61.25 95.00 39.00 74.75 90.57 69.42 21.15 21.15 23% 23% 447.42

Q 2 415.00 84.00 - 70.00 - - - 29.00 68.00 142.00 18.75 63.50 119.75 46.50 95.00 104.68 81.96 22.72 22.72 22% 22% 516.22

Q 3 729.10 110.10 - 75.00 - - - 41.30 82.10 280.00 21.40 68.10 140.00 83.00 108.00 158.01 94.55 63.46 63.46 40% 40% 4,027.34

Q 4 105.70 78.00 - 130.00 - - - 35.80 79.40 230.00 20.00 63.00 119.70 71.70 95.70 93.55 128.52 (34.98) 34.98 -37% 37% 1,223.41

Q 1 98.00 21.30 - 112.00 - - - 32.40 76.10 237.80 17.20 56.00 160.10 60.00 97.70 88.05 115.11 (27.06) 27.06 -31% 31% 732.10

Q 2 75.70 18.30 - 180.00 - - - 36.80 73.90 235.00 16.10 55.00 22.80 51.40 87.00 77.45 103.69 (26.24) 26.24 -34% 34% 688.44

Q 3 71.60 17.60 - 185.00 - - - 32.40 71.40 235.00 15.40 51.10 30.10 46.10 86.20 76.54 83.85 (7.32) 7.32 -10% 10% 53.53

Q 4 69.50 17.00 - 145.10 - - - 29.10 74.00 266.30 13.50 53.50 28.80 39.00 81.00 74.25 79.12 (4.86) 4.86 -7% 7% 23.63

Q 1 70.00 14.60 3.00 115.00 - 9.00 9.50 19.50 71.60 7.10 12.60 50.00 24.80 30.90 2.50 31.44 75.58 (44.14) 44.14 -140% 140% 1,948.64

Q 2 65.00 13.90 3.00 58.70 - 6.40 8.80 13.70 70.20 6.00 12.00 48.50 20.50 25.50 89.00 31.51 53.30 (21.79) 21.79 -69% 69% 474.68

Q 3 76.50 28.00 3.00 84.00 - 9.00 8.30 16.90 85.00 10.90 14.50 48.50 26.70 35.80 72.00 37.08 40.04 (2.96) 2.96 -8% 8% 8.76

Q 4 72.70 18.10 2.60 74.60 23.80 7.00 6.70 14.20 80.00 9.60 13.70 45.00 23.60 29.80 80.00 33.43 34.28 (0.85) 0.85 -3% 3% 0.73

Q 1 73.20 17.20 2.00 52.20 18.00 5.50 5.30 12.10 79.60 8.60 13.20 47.40 23.70 25.00 65.40 29.89 34.14 (4.25) 4.25 -14% 14% 18.03

Q 2 74.00 19.00 2.20 70.10 25.50 7.10 6.80 12.70 78.20 9.20 13.40 46.00 26.60 29.40 65.00 32.35 32.39 (0.04) 0.04 0% 0% 0.00

Q 3 64.70 17.10 1.90 94.00 17.30 5.90 6.30 10.40 77.00 8.00 10.70 41.90 24.00 27.10 63.30 31.31 31.83 (0.52) 0.52 -2% 2% 0.27

Q 4 63.00 19.80 1.70 70.10 21.40 5.70 6.80 11.70 74.10 7.60 12.50 46.30 25.00 29.30 63.00 30.53 31.34 (0.80) 0.80 -3% 3% 0.64

2014 Q 1 31.13 (31.13) 31.13 968.95

Sum 2,113.09 2,037.19 (56.69) 459.44 -256% 740% 13,303.48

N 40 38 38 38 37 37 38






2010

2011

2012

2013

2004

2005

2006

2007

2008

2009

42

Figure 4.8.1

-

100.00

200.00

300.00

400.00

500.00

600.00

700.00

800.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Pri

ce p

er S

ha

re Hotel Industry

Aitken Spence Hotel Holdings

Browns Beach

Beruwala Resorts Limited

Beruwela Walkinn

Hikkaduwa Beach Resort Limited

Kalpitiya Beach Resort

Waskaduwa Beach Resort

Galadari

Hotel Sigiriya

Kandy Hotels

John Keels Hotels

Lighthouse Hotel

Serendib Hotels

TAJ Lanka

Tangerine



43

Figure 4.8.2

-

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00

Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Pri

ce p

er S

ha

re Hotel Industry



44

4.9 Insurance industry

Share prices of insurance industry were examined and tabulated (Refer table 4.9.1) to

forecasting the share prices for the first quarter of 2014. There were seven listed quoted

companies namely Asian Alliance, Amana Takaful Plc, Ceylinco, Eagle Insurance, HNB

Assurance, Janashakthi Insurance Company Limited, Union Assurance were identified and

selected to represent the insurance industry over last ten years. Quarterly share prices were

derived based on the average daily share prices published in the Colombo Stock Exchange

web site.


insurance industry average share price was continuously increasing from the fourth quarter of

2012 to fourth quarter of 2013. (i.e. Rs. 197.54 to Rs. 266.33) (Refer table 4.9.1). Based on


quarter of 2014 would be Rs. 255.84 which is above than the latest quarter share price of



i.e. 0.13 and mean percentage error was 0.05 (Refer table 4.9.1) which indicates the high

accuracy level of forecasting technique. Therefore, as industry wise, insurance industry is one

of share price increasing industry which required taking the prudent decision whether to

invest, hold or divest the investment made in the insurance industry. However, it was noted


increase during the period from the fourth quarter of 2012 to fourth quarter of 2013 and

thereafter forecasted that the share prices of whole industry would further be increased (Refer

figure 4.9.1 and 4.9.2).

When further analyzing of insurance industry, I could noted that Ceylinco Plc has reported

the highest share price Rs. 1,349.70 in fourth quarter of 2013 (Refer table 4.9.1). At the end

of fourth quarter of 2013, Rs. 1,349.70 (Refer figure 4.9.1 and 4.9.2) average share price was

reported as the highest company share prices of the insurance industry. However, when

considering the each company separately in the insurance industry all seven companies’ share


share price going to be further increased which required to be taken the wise decisions by the

investors who are existing in the insurance industry and potential investors who are going to

invest in the insurance industry in the future mainly including the foreign investors.

45

Table 4.9.1

Insurance Industry

Year Quarter

Asian

Alliance

Amana

Takaful

Plc Ceylinco

Eagle

Insurance

HNB

Assurance

Janashakthi

Insurance

Company

Limited

Union

Assurance

Industry

Average

Quarter

Price (Yt)

Forecaste

d Share


(Yt -

Y^t) /

Actual

%

Absolute

% (Yt - Y^t) ^2

Q 1 - - 35.00 109.00 10.00 - 45.00 49.75

Q 2 - - 32.00 120.00 12.25 - 52.00 54.06

Q 3 - - 42.00 120.00 12.50 - 52.50 56.75

Q 4 - - 40.00 110.00 12.50 - 45.00 51.88 54.54 (2.67) 2.67 -5% 5% 7.12

Q 1 - - 46.00 83.00 13.75 - 48.00 47.69 53.78 (6.09) 6.09 -13% 13% 37.06

Q 2 - - 56.50 81.00 16.50 - 47.00 50.25 50.76 (0.51) 0.51 -1% 1% 0.26

Q 3 - - 95.00 107.00 19.00 - 78.75 74.94 49.81 25.13 25.13 34% 34% 631.58

Q 4 - - 77.00 85.00 13.00 - 100.00 68.75 62.08 6.67 6.67 10% 10% 44.47

Q 1 - 61.75 145.00 135.00 19.00 - 107.00 93.55 66.91 26.64 26.64 28% 28% 709.89

Q 2 - 54.25 108.00 120.00 17.00 - 92.00 78.25 82.39 (4.14) 4.14 -5% 5% 17.12

Q 3 - 42.00 157.00 135.25 18.00 - 103.75 91.20 80.94 10.26 10.26 11% 11% 105.27

Q 4 - 39.00 170.00 135.50 24.75 - 102.50 94.35 87.79 6.57 6.57 7% 7% 43.10

Q 1 - 30.00 174.00 140.00 35.00 - 83.75 92.55 90.19 2.36 2.36 3% 3% 5.59

Q 2 - 29.00 180.00 136.00 21.25 - 44.00 82.05 92.82 (10.77) 10.77 -13% 13% 115.99

Q 3 - 15.50 180.00 140.25 24.00 - 42.00 80.35 87.66 (7.31) 7.31 -9% 9% 53.44

Q 4 - 14.50 185.00 150.75 24.50 - 46.25 84.20 83.30 0.90 0.90 1% 1% 0.81

Q 1 - 13.50 214.75 138.00 24.00 11.50 57.00 76.46 82.62 (6.16) 6.16 -8% 8% 37.90

Q 2 - 11.25 225.25 135.00 23.00 10.50 70.25 79.21 79.56 (0.35) 0.35 0% 0% 0.12

Q 3 - 11.00 218.00 130.00 22.75 9.75 71.25 77.13 79.38 (2.26) 2.26 -3% 3% 5.09

Q 4 - 6.00 187.00 115.00 18.25 5.75 49.75 63.63 77.62 (13.99) 13.99 -22% 22% 195.77

Q 1 - 7.50 140.00 110.75 20.25 7.75 70.25 59.42 70.79 (11.38) 11.38 -19% 19% 129.39

Q 2 - 10.75 175.00 145.00 31.00 7.75 73.00 73.75 64.22 9.53 9.53 13% 13% 90.81

Q 3 - 10.50 240.00 170.00 47.25 10.25 89.00 94.50 67.43 27.08 27.08 29% 29% 733.06

Q 4 - 12.50 220.00 178.00 49.50 9.50 90.75 93.38 81.26 12.12 12.12 13% 13% 146.81

Q 1 - 16.00 231.00 206.00 55.50 14.00 104.00 104.42 89.79 14.63 14.63 14% 14% 214.01

Q 2 - 3.00 270.00 218.50 68.00 15.00 115.50 115.00 99.12 15.88 15.88 14% 14% 252.15

Q 3 72.00 3.20 440.40 305.00 80.60 17.00 160.00 154.03 107.50 46.53 46.53 30% 30% 2,164.91

Q 4 80.20 3.00 381.00 280.00 78.00 16.00 122.10 137.19 132.40 4.79 4.79 3% 3% 22.93

Q 1 157.00 2.10 730.00 299.10 80.00 16.50 169.70 207.77 137.80 69.97 69.97 34% 34% 4,895.80

Q 2 136.50 2.40 700.00 275.10 60.20 16.30 106.70 185.31 175.85 9.47 9.47 5% 5% 89.63

Q 3 358.50 2.70 774.60 280.00 61.50 15.70 115.50 229.79 182.43 47.36 47.36 21% 21% 2,242.97

Q 4 166.70 2.40 746.60 247.40 56.90 15.00 108.10 191.87 212.04 (20.17) 20.17 -11% 11% 406.83

Q 1 86.20 1.90 812.40 200.20 45.80 11.60 90.40 178.36 201.93 (23.58) 23.58 -13% 13% 555.88

Q 2 86.30 1.60 801.50 152.90 42.20 10.00 85.10 168.51 192.70 (24.18) 24.18 -14% 14% 584.81

Q 3 94.60 1.70 820.60 374.70 52.40 11.20 106.00 208.74 176.14 32.60 32.60 16% 16% 1,063.04

Q 4 89.00 1.70 816.80 329.90 50.80 10.70 83.90 197.54 190.60 6.95 6.95 4% 4% 48.24

Q 1 90.00 1.70 999.90 350.00 47.80 12.30 85.70 226.77 195.10 31.67 31.67 14% 14% 1,003.26

Q 2 80.00 1.60 1,041.00 301.10 51.90 13.50 99.50 226.94 214.40 12.55 12.55 6% 6% 157.39

Q 3 103.50 1.60 1,254.40 273.50 50.10 13.20 107.00 257.61 221.01 36.60 36.60 14% 14% 1,339.77

Q 4 80.40 1.40 1,349.70 265.40 51.20 12.20 104.00 266.33 242.24 24.08 24.08 9% 9% 580.05

2014 Q 1 255.84 (255.84) 255.84 65,452.64

Sum 4,824.21 4,572.69 90.96 869.71 194% 468% 84,184.96

N 40 38 38 38 37 37 38






2010

2011

2012

2013

2004

2005

2006

2007

2008

2009

46

Figure 4.9.1

-

200.00

400.00

600.00

800.00

1,000.00

1,200.00

1,400.00

1,600.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pric

e p

er S

ha

re

Insurance Industry

Asian Alliance

Amana Takaful Plc

Ceylinco

Eagle Insurance

HNB Assurance

Janashakthi InsuranceCompany Limited

Union Assurance

Industry Average QuarterPrice (Yt)


47

Figure 4.9.2

-

50.00

100.00

150.00

200.00

250.00

300.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er S

ha

re

Insurance Industry



48

4.10 Manufacturing industry

Share prices of manufacturing industry were examined and tabulated (Refer table 4.10.1) to

forecasting the share prices for the first quarter of 2014. There were twenty two listed quoted

companies mainly including namely Abans, Lanka Ashok, Browns, Printcare, Lanka

Ceramic, DIMO, Dankotuwa Porcel, Ceylon Glass Co., Kalani Kebles, Laugfs Gas Ltd,

Caltex, Royal Ceramics, Singer Sri Lanka, Tokyo Cement, Kelani Tyres, and United Motors

were identified and selected to represent the manufacturing industry over last ten years.

Quarterly share prices were derived based on the average daily share prices published in the

Colombo Stock Exchange web site.


manufacturing industry average share price was continuously decreasing from the second







accuracy level of forecasting technique. Therefore, as industry wise, manufacturing industry

is one of share price decline industry which required taking the prudent decision whether to

invest, hold or divest the investment made in the manufacturing industry. However, it was

noted that the share prices of individual companies as well as the industry as a whole have

started to decline from the second quarter of 2011 to fourth quarter of 2013 and thereafter

forecasted that the share prices of whole industry would further be declined (Refer figure

4.10.1 and 4.10.2).

When further analyzing of manufacturing industry, I could noted that Lanka Ashok has

reported the highest share price Rs. 5,918.00 in second quarter of 2011 (Refer table 4.10.1).

At the end of fourth quarter of 2013, Rs. 1,475.00 (Refer figure 4.10.1 and 4.10.2) average

share price was reported as the highest company share prices of the manufacturing industry.

However, when considering the each company separately in the manufacturing industry all

twenty two companies’ share prices which ware forecasted for the first quarter of 2014, it was

noted that the forecasted share price going to be further declined.

49

Table 4.10.1

Manufacturing Industry

Year Quarter Abans

Acl

Cables

Limited

Associat

ed

Motor

Finance

Co. Ltd

Asha

Central

Lanka

Ashok Browns

Printcar

e

Lanka

Ceramic DIMO

Dankotu

wa

Porcel

Ceylon

Glass

Co.

Kalani

Kebles

Lanka

Aluminiu

m

Lanka

Cement

Laugfs

Gas

Limited Caltex

Royal

Ceramics

Singer

Sri

Lanka

Lanka

Tiles

Tokyo

Cement

Kelani

Tyres

United

Motors

Industry

Average

Quarter

Price (Yt)

Forecaste

d Share


(Yt -

Y^t) /

Actual

%

Absolute

% (Yt - Y^t) ^2

Q 1 59.75 32.75 - 13.50 60.00 150.00 65.00 16.75 53.00 15.75 27.00 130.00 14.00 7.00 - 76.00 17.00 80.00 40.00 127.00 6.25 28.00 50.94

Q 2 95.00 43.50 - 13.75 75.00 270.00 63.25 20.50 74.50 14.75 40.25 134.75 16.00 9.00 - 84.25 16.50 73.00 43.00 130.00 7.50 28.50 62.65

Q 3 121.00 58.50 - 17.25 90.00 260.00 70.00 19.00 63.50 15.25 43.00 135.00 15.00 8.25 - 69.50 31.50 73.75 48.50 145.00 9.00 32.75 66.29

Q 4 85.00 63.00 - 15.25 90.00 250.00 90.50 20.25 64.00 15.75 55.00 125.00 16.50 7.75 - 63.75 3.00 71.75 59.50 140.00 9.75 27.00 63.64 62.13 1.51 1.51 2% 2% 2.28

Q 1 90.00 89.50 - 27.00 108.00 260.00 109.00 24.50 104.50 20.75 48.00 145.00 24.00 10.00 - 64.00 4.50 84.75 65.00 180.00 10.75 51.00 76.01 64.24 11.78 11.78 15% 15% 138.71

Q 2 90.00 90.00 - 24.50 195.00 252.00 110.00 29.50 119.00 21.00 34.50 92.00 19.75 9.25 - 59.50 3.75 65.25 65.00 186.00 10.25 45.00 76.06 70.36 5.71 5.71 8% 8% 32.58

Q 3 120.00 115.00 - 38.00 290.00 470.00 74.75 43.50 143.00 21.00 3.25 130.00 19.75 9.00 - 68.00 4.25 75.50 69.75 195.00 14.25 73.00 98.85 73.56 25.29 25.29 26% 26% 639.46

Q 4 109.00 93.00 - 23.75 310.00 460.25 38.00 31.00 108.00 15.00 2.25 90.00 12.00 6.00 - 58.00 3.00 63.50 60.00 165.00 9.25 53.50 85.53 87.45 (1.92) 1.92 -2% 2% 3.69

Q 1 120.00 124.00 - 38.00 252.00 530.00 55.00 34.50 138.50 14.25 2.50 100.00 29.00 6.50 - 67.00 3.40 84.00 67.75 185.00 13.75 81.50 97.33 87.63 9.70 9.70 10% 10% 94.14

Q 2 105.00 108.00 - 37.00 219.00 538.00 52.00 25.00 140.00 9.25 1.80 83.50 27.50 6.00 - 69.00 2.70 55.25 58.50 174.00 10.75 69.00 89.56 94.09 (4.53) 4.53 -5% 5% 20.53

Q 3 112.00 131.50 - 44.00 249.00 590.00 55.00 33.25 133.00 11.50 2.20 95.00 28.75 6.25 - 83.00 3.70 72.75 64.00 183.00 15.50 75.50 99.45 91.09 8.36 8.36 8% 8% 69.87

Q 4 101.00 213.75 - 41.50 185.25 919.00 59.50 36.00 108.50 10.00 2.50 91.75 28.75 8.75 - 85.50 3.50 74.25 65.00 194.75 16.50 72.00 115.89 96.06 19.83 19.83 17% 17% 393.22

Q 1 91.50 144.00 - 40.00 170.00 630.00 53.00 39.00 120.00 9.00 2.50 85.25 29.75 8.50 - 85.25 35.00 75.00 49.00 250.00 23.00 80.00 100.99 105.69 (4.70) 4.70 -5% 5% 22.11

Q 2 75.25 134.00 - 37.50 190.00 610.00 55.00 37.00 100.00 10.25 2.50 80.50 30.00 7.50 - 82.00 30.00 70.00 54.75 252.00 21.00 68.00 97.36 105.15 (7.79) 7.79 -8% 8% 60.63

Q 3 82.00 112.00 - 95.75 300.00 650.00 60.25 35.00 90.00 16.00 2.60 78.00 31.00 8.75 - 82.50 30.50 65.00 60.75 256.00 21.50 60.25 106.89 102.16 4.74 4.74 4% 4% 22.44

Q 4 93.50 94.50 - 83.25 210.00 900.00 50.00 34.50 78.00 15.00 2.00 96.00 30.75 7.25 - 85.25 32.00 68.00 55.75 239.50 20.00 54.25 112.48 102.85 9.62 9.62 9% 9% 92.59

Q 1 81.75 46.00 - 75.00 360.00 925.50 63.00 56.00 88.75 17.00 2.00 90.00 32.00 14.25 - 98.00 42.50 57.25 63.50 251.25 24.00 53.75 122.08 107.78 14.30 14.30 12% 12% 204.41

Q 2 75.50 37.50 - 58.00 240.00 950.00 59.50 55.00 111.25 9.50 2.30 94.75 29.00 10.50 - 100.25 45.00 50.50 65.00 220.00 56.50 54.50 116.23 116.16 0.07 0.07 0% 0% 0.00

Q 3 90.00 38.25 - 65.00 429.50 33.75 55.00 40.75 90.00 8.50 2.10 80.00 27.50 11.00 - 112.50 42.50 54.50 61.00 195.50 47.75 73.75 77.94 117.23 (39.29) 39.29 -50% 50% 1,543.61

Q 4 50.00 30.00 - 50.00 249.50 19.00 52.25 31.50 62.00 5.25 1.30 60.00 18.00 6.25 - 92.00 28.00 32.00 25.00 192.00 22.00 33.25 52.97 98.25 (45.29) 45.29 -86% 86% 2,051.14

Q 1 64.00 24.25 - 60.25 355.00 18.00 50.25 29.75 60.25 5.00 1.30 92.00 22.50 11.00 - 105.50 27.50 32.25 28.50 125.00 24.25 33.50 58.50 73.11 (14.61) 14.61 -25% 25% 213.40

Q 2 72.00 48.00 - 92.50 336.00 34.50 60.00 37.75 101.00 9.00 1.80 92.75 29.75 23.00 - 122.00 42.25 48.00 44.00 158.00 43.25 59.25 72.74 60.73 12.01 12.01 17% 17% 144.26

Q 3 80.00 66.25 - 83.00 425.00 60.00 66.00 54.00 110.25 8.75 1.80 152.00 28.25 30.25 - 153.00 48.50 66.00 56.50 192.00 45.25 62.00 89.44 64.51 24.93 24.93 28% 28% 621.32

Q 4 100.00 76.75 - 106.75 1,345.00 74.50 67.25 49.00 180.00 11.25 2.20 153.00 28.00 23.25 - 141.75 66.50 76.50 66.50 322.25 67.25 64.25 151.10 78.24 72.86 72.86 48% 48% 5,307.85

Q 1 144.75 75.00 - 109.25 1,075.00 87.75 85.00 66.75 424.75 10.50 2.20 194.50 27.25 27.50 25.40 170.00 113.00 74.00 87.75 28.00 63.50 90.00 141.99 116.93 25.06 25.06 18% 18% 628.21

Q 2 180.50 94.00 - 140.00 1,900.00 109.50 74.00 86.00 620.00 38.00 2.60 239.00 40.00 27.75 24.10 163.25 159.75 117.50 103.75 32.00 78.00 125.00 207.37 134.21 73.15 73.15 35% 35% 5,351.36

Q 3 260.10 99.00 - 170.00 4,000.00 196.60 120.00 97.90 890.00 70.20 4.10 206.50 39.00 27.60 26.50 170.10 314.80 228.30 109.60 51.60 119.20 232.40 353.98 176.50 177.48 177.48 50% 50% 31,497.55

Q 4 260.00 85.10 - 153.80 4,050.00 246.90 117.10 111.70 973.50 61.40 7.80 204.50 35.70 28.00 25.90 159.50 304.90 195.00 134.30 55.00 49.30 115.70 351.20 267.60 83.60 83.60 24% 24% 6,988.72

Q 1 258.10 94.00 465.80 175.00 2,650.00 289.80 127.60 146.40 1,484.70 59.90 11.10 185.20 56.60 24.90 44.40 160.00 157.00 224.20 131.10 60.80 52.60 152.20 318.70 323.26 (4.56) 4.56 -1% 1% 20.83

Q 2 271.40 80.20 605.00 215.30 5,918.00 312.10 218.70 117.00 1,438.50 48.50 8.80 205.00 57.90 22.30 41.40 157.10 155.10 116.10 109.20 55.30 47.00 135.00 469.77 335.50 134.26 134.26 29% 29% 18,026.92

Q 3 246.00 77.00 500.50 196.00 3,500.00 275.10 40.60 106.20 1,350.00 35.20 8.40 86.20 52.30 24.00 40.70 163.70 132.50 134.20 100.40 50.00 44.50 155.40 332.68 400.73 (68.06) 68.06 -20% 20% 4,631.60

Q 4 190.10 74.00 300.50 199.90 2,925.00 234.80 36.90 85.00 1,302.10 33.80 7.90 75.00 44.00 19.80 38.00 170.00 141.50 132.70 80.30 44.00 38.50 146.00 287.26 371.01 (83.75) 83.75 -29% 29% 7,013.30

Q 1 158.00 62.60 410.00 165.00 2,069.00 155.10 31.00 70.00 982.20 16.30 6.10 66.20 25.20 11.00 25.80 181.90 115.00 101.00 65.10 37.00 26.50 108.00 222.18 337.39 (115.21) 115.21 -52% 52% 13,272.61

Q 2 98.50 55.30 308.20 230.00 1,915.00 110.00 30.50 63.00 581.70 12.30 5.10 59.40 19.70 8.00 20.50 168.00 91.00 97.70 63.00 29.90 27.20 69.90 184.72 263.81 (79.08) 79.08 -43% 43% 6,254.08

Q 3 110.70 75.00 439.50 259.00 2,071.90 165.80 34.00 71.40 771.90 20.30 6.50 70.50 38.00 12.10 29.60 192.00 103.00 112.50 74.00 29.00 39.50 100.00 219.37 216.47 2.90 2.90 1% 1% 8.43

Q 4 96.50 65.00 336.00 220.00 1,750.00 124.20 29.20 59.30 605.00 16.10 6.00 64.50 33.70 9.30 25.70 202.40 94.00 102.00 64.90 28.00 34.50 96.30 184.66 209.54 (24.88) 24.88 -13% 13% 618.81

Q 1 89.60 65.50 350.10 250.00 1,710.00 118.00 28.00 65.00 505.00 13.80 6.10 61.30 26.70 8.40 24.50 217.00 99.50 99.50 69.50 23.50 34.50 96.00 180.07 195.09 (15.02) 15.02 -8% 8% 225.60

Q 2 135.00 68.00 385.00 267.00 1,800.00 117.40 28.10 120.00 530.00 14.40 6.60 83.80 30.60 9.00 25.70 296.00 104.00 98.00 79.90 25.00 46.00 118.00 199.43 189.31 10.12 10.12 5% 5% 102.50

Q 3 102.50 65.20 362.10 260.00 1,500.00 95.00 28.30 119.90 499.70 13.00 5.20 75.00 27.60 7.00 26.50 270.00 87.00 98.20 68.10 23.30 41.90 107.10 176.48 190.67 (14.19) 14.19 -8% 8% 201.28

Q 4 103.10 65.00 301.10 262.70 1,475.00 81.00 28.00 114.50 482.10 13.20 4.20 68.30 29.10 6.30 28.70 265.20 83.80 85.50 73.00 27.20 50.10 110.00 170.78 184.08 (13.31) 13.31 -8% 8% 177.07

2014 Q 1 178.22 (178.22) 178.22 31,762.21

Sum 6,141.54 5,948.78 12.88 1,441.67 1% 730% 138,459.33

N 40 38 38 38 37 37 38






2010

2011

2012

2013

2004

2005

2006

2007

2008

2009

50

Figure 4.10.1

-

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

6,000.00

7,000.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er S

ha

re

Manufacturing Industry Abans

Acl Cables Limited

Associated Motor Finance Co. Ltd

Asha Central

Lanka Ashok

Browns

Printcare

Lanka Ceramic

DIMO

Dankotuwa Porcel

Ceylon Glass Co.

Kalani Kebles

Lanka Aluminium

Lanka Cement

Laugfs Gas Limited

Caltex

Royal Ceramics

Singer Sri Lanka

Lanka Tiles

Tokyo Cement

Kelani Tyres

United Motors



51

Figure 4.10.2

-

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

450.00

500.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er S

ha

re

Manufacturing Industry



52

4.11 Plantation industry

Share prices of plantation industry were examined and tabulated (Refer table 4.11.1) to

forecasting the share prices for the first quarter of 2014. There were eight listed quoted

companies namely Agalawatte Plantation Limited, Balangoda Plantations, Bairaha Farms,

Bogawantalawa, Kegalle Plantations, Kotagala Plantations, Talawakelle Tea Estates, and

Watawala Plantations were identified and selected to represent the plantation industry over

last ten years. Quarterly share prices were derived based on the average daily share prices

published in the Colombo Stock Exchange web site.


plantation industry average share price was continuously decreasing from the first quarter of

2011 to fourth quarter of 2013. (I.e. Rs. 127.01 to Rs. 44.54) (Refer table 4.11.1). Based on






accuracy level of forecasting technique. Therefore, as industry wise, plantation industry is


invest, hold or divest the investment made in the plantation industry. However, it was noted


decline from the first quarter of 2011 to fourth quarter of 2013 and thereafter forecasted that

the share prices of whole industry would further be declined (Refer figure 4.11.1 and 4.11.2).

When further analyzing of plantation industry, I could noted that Bairaha Farms has reported

the highest share price Rs. 401.00 in first quarter of 2011 (Refer table 4.11.1). At the end of

fourth quarter of 2013, Rs. 130.50 (Refer figure 4.11.1 and 4.11.2) average share price was

reported as the highest company share prices of the plantation industry. However, when

considering the each company separately in the plantation industry all eight companies’ share


share price going to be further declined except Balangoda Plantations, Kegalle Plantations,

Kotagala Plantations, and Talawakelle Tea Estates (i.e. these four companies’ forecasted

share price going to be increased.) which required to be taken wise decisions by the investors

who are existing and potential investors of plantation industry mainly the foreign investors.

53

Table 4.11.1

Plantation Industry

Year Quarter

Agalawatte

Plantation

Limited

Balangoda

Plantations

Bairaha

Farms

Bogawan

talawa

Kegalle

Plantations

Kotagala

Plantations

Talawak

elle Tea

Estates

Watawala

Plantations

Industry

Average

Quarter

Price (Yt)

Forecasted

Share Price Yt - Y^t Absolute

(Yt -

Y^t) /

Actual

%

Absolute

%

(Yt - Y^t)

^2

Q 1 11.75 12.00 16.00 11.25 13.25 6.50 14.25 8.00 11.63

Q 2 14.00 13.50 17.00 12.50 17.00 6.75 14.50 10.50 13.22

Q 3 12.75 16.50 16.25 16.00 17.00 9.00 17.75 12.25 14.69

Q 4 10.00 16.50 14.50 15.00 17.50 7.75 16.00 12.00 13.66 13.63 0.02 0.02 0% 0% 0.00

Q 1 12.75 17.00 15.75 16.00 22.00 8.25 17.50 18.50 15.97 13.88 2.09 2.09 13% 13% 4.37

Q 2 13.00 17.75 14.50 15.00 25.00 13.75 20.75 27.00 18.34 15.02 3.33 3.33 18% 18% 11.06

Q 3 17.00 15.75 20.50 16.00 31.00 16.00 24.50 29.75 21.31 16.69 4.62 4.62 22% 22% 21.33

Q 4 9.75 12.00 15.00 16.00 21.00 11.00 17.00 22.75 15.56 19.35 (3.79) 3.79 -24% 24% 14.37

Q 1 16.50 18.25 16.00 16.00 40.00 17.00 29.25 40.00 24.13 17.84 6.28 6.28 26% 26% 39.45

Q 2 26.50 16.00 10.25 17.75 47.75 23.00 25.50 42.50 26.16 20.99 5.16 5.16 20% 20% 26.65

Q 3 24.00 17.50 11.00 16.25 47.00 29.75 25.50 58.75 28.72 23.43 5.29 5.29 18% 18% 27.99

Q 4 20.75 16.50 10.25 13.50 44.50 27.25 26.75 64.00 27.94 27.03 0.91 0.91 3% 3% 0.82

Q 1 21.00 13.75 9.25 13.50 42.00 28.50 21.75 55.00 25.59 27.82 (2.22) 2.22 -9% 9% 4.94

Q 2 25.00 15.75 9.00 15.25 49.00 34.75 20.00 64.00 29.09 26.92 2.17 2.17 7% 7% 4.72

Q 3 24.00 15.00 10.50 14.75 42.00 28.00 20.25 59.00 26.69 27.81 (1.13) 1.13 -4% 4% 1.27

Q 4 35.25 27.00 14.25 23.00 54.00 46.75 35.75 83.50 39.94 27.19 12.75 12.75 32% 32% 162.48

Q 1 38.25 35.00 17.00 30.75 60.00 67.50 37.00 86.00 46.44 33.79 12.64 12.64 27% 27% 159.86

Q 2 34.50 28.75 14.75 26.00 61.50 53.25 34.25 75.00 41.00 40.54 0.46 0.46 1% 1% 0.21

Q 3 28.00 29.00 13.75 23.00 50.00 40.00 32.75 77.25 36.72 42.42 (5.70) 5.70 -16% 16% 32.49

Q 4 11.00 12.00 8.00 11.00 28.00 17.00 13.00 57.50 19.69 39.95 (20.26) 20.26 -103% 103% 410.44

Q 1 16.00 13.50 8.75 12.50 19.00 16.00 14.00 58.50 19.78 29.06 (9.28) 9.28 -47% 47% 86.08

Q 2 23.00 23.00 14.00 30.25 34.50 30.50 27.00 70.00 31.53 23.14 8.39 8.39 27% 27% 70.40

Q 3 23.50 23.25 17.25 43.75 34.75 31.50 27.75 73.25 34.38 25.64 8.74 8.74 25% 25% 76.34

Q 4 21.75 24.00 24.50 37.50 33.50 30.00 25.25 90.00 35.81 30.60 5.21 5.21 15% 15% 27.14

Q 1 27.25 29.00 34.00 36.50 47.00 44.75 31.00 176.00 53.19 34.53 18.66 18.66 35% 35% 348.29

Q 2 37.25 38.00 70.00 43.50 80.75 68.25 39.50 220.25 74.69 44.21 30.48 30.48 41% 41% 928.73

Q 3 46.30 67.10 198.00 54.20 159.80 94.70 50.00 38.00 88.51 60.46 28.05 28.05 32% 32% 786.80

Q 4 63.00 57.40 198.30 20.40 161.80 116.90 46.40 27.90 86.51 77.30 9.21 9.21 11% 11% 84.87

Q 1 93.30 56.10 401.00 19.80 207.50 168.00 45.40 25.00 127.01 84.75 42.27 42.27 33% 33% 1,786.33

Q 2 70.10 50.60 323.10 19.00 183.10 139.70 38.00 22.70 105.79 107.16 (1.38) 1.38 -1% 1% 1.89

Q 3 51.10 36.30 253.40 16.40 145.00 92.00 32.50 18.00 80.59 108.30 (27.71) 27.71 -34% 34% 767.98

Q 4 49.80 28.80 210.30 14.20 105.00 64.30 29.70 14.20 64.54 97.43 (32.90) 32.90 -51% 51% 1,082.08

Q 1 39.00 24.90 130.00 10.50 103.00 70.00 23.70 10.00 51.39 77.60 (26.22) 26.22 -51% 51% 687.23

Q 2 30.00 22.60 123.10 7.50 91.00 55.40 18.30 8.30 44.53 61.17 (16.65) 16.65 -37% 37% 277.14

Q 3 39.50 39.90 181.00 13.60 113.20 81.00 33.00 12.80 64.25 50.59 13.66 13.66 21% 21% 186.70

Q 4 32.60 38.00 150.10 12.10 104.00 73.80 24.00 12.00 55.83 55.76 0.06 0.06 0% 0% 0.00

Q 1 33.90 33.60 149.70 11.50 112.00 54.00 26.20 11.20 54.01 56.09 (2.08) 2.08 -4% 4% 4.33

Q 2 27.30 28.50 139.90 12.00 103.10 51.60 23.10 12.40 49.74 56.60 (6.87) 6.87 -14% 14% 47.15

Q 3 22.90 27.50 130.00 10.60 93.10 40.00 19.90 10.50 44.31 52.24 (7.93) 7.93 -18% 18% 62.81

Q 4 22.10 29.00 130.50 9.10 96.00 36.40 23.60 9.60 44.54 47.88 (3.34) 3.34 -8% 8% 11.17

2014 Q 1 45.51 (45.51) 45.51 2,071.16

Sum 1,707.38 1,660.34 7.51 433.40 7% 848% 10,317.08

N 40 38 38 38 37 37 38






2010

2011

2012

2013

2004

2005

2006

2007

2008

2009

54

Figure 4.11.1

-

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

450.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er S

ha

re

Plantation Industry

Agalawatte PlantationLimited

Balangoda Plantations

Bairaha Farms

Bogawantalawa

Kegalle Plantations

Kotagala Plantations

Talawakelle TeaEstates

Watawala Plantations



55

Figure 4.11.2

-

20.00

40.00

60.00

80.00

100.00

120.00

140.00

Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er S

ha

re

Plantation Industry



56

4.12 Telecommunication industry

Share prices of telecommunication industry were examined and tabulated (Refer table 4.12.1)

to forecasting the share prices for the first quarter of 2014. There were two listed quoted

companies namely Dialog Telecom and Sri Lanka Telecom were identified and selected to

represent the telecommunication industry over last ten years. Quarterly share prices were

derived based on the average daily share prices published in the Colombo Stock Exchange

web site.


telecommunication industry average share price was continuously decreasing from the fourth







accuracy level of forecasting technique. Therefore, as industry wise, telecommunication


whether to invest, hold or divest the investment made in the telecommunication industry.


a whole have started to decline from the fourth quarter of 2010 to fourth quarter of 2013 and


figure 4.12.1 and 4.12.2).

When further analyzing of telecommunication industry, I could noted that Sri Lanka Telecom

has reported the highest share price Rs. 57.00 in fourth quarter of 2010 (Refer table 4.12.1).

At the end of fourth quarter of 2013, Rs. 39.00 (Refer figure 4.12.1 and 4.12.2) average share

price was reported as the highest company share prices of the telecommunication industry.

However, when considering the each company separately in the telecommunication industry

all two companies’ share prices which ware forecasted for the first quarter of 2014, it was

noted that the forecasted share price going to be further declined which required to be taken

the wise decisions by the investors who have invested and potential investors.

57

Table 4.12.1

Telecommunication Industry

Year Quarter

Dialog

Telekom

Sri

Lanka

Telecom

Industry

Average

Quarter

Price (Yt)

Forecaste

d Share


(Yt -

Y^t) /

Actual

%

Absolute

% (Yt - Y^t) ^2

Q 1 15.50 18.50 17.00

Q 2 16.75 16.75 16.75

Q 3 19.75 18.50 19.13

Q 4 16.50 15.75 16.13 17.99 (1.86) 1.86 -12% 12% 3.47

Q 1 20.00 16.25 18.13 17.15 0.97 0.97 5% 5% 0.95

Q 2 19.75 22.00 20.88 17.73 3.15 3.15 15% 15% 9.92

Q 3 21.75 24.50 23.13 19.10 4.03 4.03 17% 17% 16.20

Q 4 27.00 16.50 21.75 21.45 0.30 0.30 1% 1% 0.09

Q 1 25.50 18.00 21.75 21.99 (0.24) 0.24 -1% 1% 0.06

Q 2 23.50 18.00 20.75 22.03 (1.28) 1.28 -6% 6% 1.63

Q 3 23.00 21.00 22.00 21.25 0.75 0.75 3% 3% 0.56

Q 4 20.00 27.50 23.75 21.58 2.18 2.18 9% 9% 4.73

Q 1 16.75 37.25 27.00 22.63 4.38 4.38 16% 16% 19.14

Q 2 14.25 36.50 25.38 25.03 0.35 0.35 1% 1% 0.12

Q 3 8.00 33.25 20.63 25.54 (4.91) 4.91 -24% 24% 24.13

Q 4 6.00 31.50 18.75 23.33 (4.58) 4.58 -24% 24% 20.93

Q 1 4.90 41.25 23.08 20.64 2.44 2.44 11% 11% 5.94

Q 2 5.25 45.25 25.25 21.29 3.96 3.96 16% 16% 15.70

Q 3 6.50 41.50 24.00 23.30 0.70 0.70 3% 3% 0.49

Q 4 7.25 31.00 19.13 24.19 (5.07) 5.07 -26% 26% 25.65

Q 1 6.75 33.50 20.13 21.81 (1.69) 1.69 -8% 8% 2.85

Q 2 9.75 48.75 29.25 20.60 8.65 8.65 30% 30% 74.82

Q 3 12.40 44.75 28.58 24.49 4.09 4.09 14% 14% 16.71

Q 4 11.80 36.25 24.03 27.09 (3.06) 3.06 -13% 13% 9.38

Q 1 10.50 37.00 23.75 26.44 (2.69) 2.69 -11% 11% 7.21

Q 2 8.90 46.30 27.60 24.80 2.80 2.80 10% 10% 7.85

Q 3 8.40 49.00 28.70 25.73 2.97 2.97 10% 10% 8.82

Q 4 7.80 57.00 32.40 27.38 5.02 5.02 15% 15% 25.20

Q 1 7.10 54.00 30.55 30.33 0.22 0.22 1% 1% 0.05

Q 2 6.20 48.30 27.25 30.74 (3.49) 3.49 -13% 13% 12.15

Q 3 9.00 48.00 28.50 29.27 (0.77) 0.77 -3% 3% 0.59

Q 4 8.20 46.30 27.25 28.54 (1.29) 1.29 -5% 5% 1.65

Q 1 9.00 39.10 24.05 27.63 (3.58) 3.58 -15% 15% 12.78

Q 2 8.60 44.40 26.50 25.90 0.60 0.60 2% 2% 0.36

Q 3 8.50 44.00 26.25 25.92 0.34 0.34 1% 1% 0.11

Q 4 8.90 43.50 26.20 25.89 0.32 0.32 1% 1% 0.10

Q 1 8.80 39.90 24.35 26.28 (1.93) 1.93 -8% 8% 3.71

Q 2 8.70 39.20 23.95 25.29 (1.34) 1.34 -6% 6% 1.78

Q 3 8.80 38.00 23.40 24.52 (1.12) 1.12 -5% 5% 1.25

Q 4 8.90 39.00 23.95 23.76 0.20 0.20 1% 1% 0.04

2014 Q 1 23.79 (23.79) 23.79 565.73

Sum 950.95 912.32 (14.25) 111.04 5% 364% 902.86

N 40 38 38 38 37 37 38






2010

2011

2012

2013

2004

2005

2006

2007

2008

2009

58

Figure 4.12.1

-

10.00

20.00

30.00

40.00

50.00

60.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er S

ha

re


Dialog Telekom

Sri Lanka Telecom



59

Figure 4.12.2

-

5.00

10.00

15.00

20.00

25.00

30.00

35.00

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pri

ce p

er S

ha

re




60

Chapter 5 Conclusion

This paper depicts the fact that the usage of weighted moving average technique in

forecasting stock market prices. In this paper, all listed and quoted companies were selected

and categorized them into twelve industries. Then the derived results were presented in

tabulated form as well as graphical method as highlighting the industry stock price movement

as well as individual companies’ share price movement to obtain the better investment

decisions mainly for the potential investors. The forecasting ability of model is accessed on

the basis of MPE, MAPE, MSE, MAE, and RMSE.

This state of the art tried to sum up the actual tendencies observed in the development of

weighted moving average method as tools to forecast stock movement. To determine the

performance of our model, an empirical study was carried out with the published stock data

in Colombo Stock Exchange obtained from the internet, where the weighted moving average

approach was used to forecast the share prices of individual companies as well as industry as

a whole.

The empirical results obtained showed high level of accuracy for daily stock price prediction

with weighted moving average approach performing better than some other analysis

approaches such as NAVI method. Therefore, the weighted moving average approach has the

potential to enhance the quality of decision making of investors in the stock market by

offering more accurate stock prediction compared to existing technical analysis based

approach. In future work, we intend to determine the critical impact of specific fundamental

analysis variables on quality of stock price prediction.

Based on the results obtained only two industries were identified as the forecasted share price

increasing industries namely beverage industry and insurance industry. Ceylinco insurance

company and Nestle Lanka Plc were the highest share price reported companies in insurance

industry and beverage industry respectively. Regarding future line of research, efforts should

be put to use the different kinds of forecasting techniques mainly including the Artificial

Neural Network, NAVI method, exponential smoothing method, etc. More importantly, the

empirical literature indicates the forecasting the share price should extended for foreign share

markets without only limiting to Sri Lankan share market which is more important to foreign

investors.

61

Chapter 6 Recommendations

1. The researcher has investigated that every investors should take the wise decisions

before selling the existing shares or before purchasing the new shares since, only two

industries namely beverage and insurance industries forecasted share price going to be

increased further where as all other industries’ forecasted share price going to be

decreased.

2. Once the industry has been selected to invest, it is essential to select the best company

in the selected industry to invest and obtain the capital gain. As examples, Ceylinco

Plc is the highest share price reported company in the insurance industry where as

Nestle is the highest share price reported company in the beverage industry.

3. Regarding future line of research, efforts should be put to use the different kinds of

forecasting techniques mainly including the Artificial Neural Network, NAVI

method, exponential smoothing method, etc.

4. More importantly, the empirical literature indicates the forecasting the share price

should extended for foreign share markets without only limiting to Sri Lankan share

market which is more important to foreign investors.

62

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Documents

An Analysis of the Stock Market Forecasting in Sri Lanka done by Tharindu Nishshanka Muhandiram