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Friday, February 4, 2011

Independence Day rally drives stock market to new record

    * Market capitalisation soars to Rs. 28 billion on strong rebound in investor sentiment

    * CSE’s year to date return tops 10%

    * Analysts link bull run to IMF confidence and support with release of fifth tranche

    * Plantation stocks back in the hunt after tea industry notches record exports

The Colombo stock market, Asia’s best performing, celebrated the 63rd Independence Day early, with yesterday’s strong rebound in investor sentiment propelling it to a new high.

The bull run was evident by the fact that market capitalisation swelled by a staggering Rs. 28 billion in one session, finishing at Rs. 2.445 trillion, highest in its history, beating the previous peak of last month.

The solid 1.1% gain yesterday in the benchmark All Share Price Index boosted the market’s year-to-date return to a significant 10.7%.

The ASPI touched a new intraday high of 7,367.41 before closing at 1.16 per cent or 84.55 points firmer at a record close of 7,346.81, surpassing Wednesday’s record close of 7,262.26.

NDB Stockbrokers headlined yesterday’s rally as a ‘reaction to IMF’s confidence,’ pointing to the multilateral donor agency’s approval on Wednesday in Washington to release $ 216.6 million as the fifth tranche under the $ 2.6 billion Stand-By Arrangement (SBA).

Reuters said institutional investors started buying in large quantities after the IMF’s approval with positive comments.

“More stocks joined the positive streak, to post substantial gains. Retail sentiment is bullish irrespective of the stagnation in some of the fundamentally-strong blue chip counters. Plantation and Manufacturing sectors were on the up,” NDB Stockbrokers said.

Bank, Finance & Insurance and Diversified sectors were the highest contributors to market turnover, while both indices increased by 0.34% and 0.50% respectively.

Richards Pieris made the highest contribution to market turnover, while its share price increased by Rs. 0.90 (6.92%) and closed at Rs. 13.80.

Traded share volume was 136.6 million, against a five-day average of 102.6 million. The 30-day and 90-day average trading volumes were 88.3 million and 71.8 million respectively. Last year’s daily average volume was 69.2 million. Turnover was Rs. 4.7 billion, more than last year’s daily average of Rs. 2.4 billion.
Other analysts said that investors turned bullish on positive macro news. “We saw all round retail and institutional activity,” they added.

Foreign investors sold a net Rs. 119.6 million worth shares increasing the year to date total to Rs. 3 billion. Last year net selling was Rs. 26.4 billion.

The Colombo bourse has been Asia’s best performer with a 10.71 per cent gain in 2011 after being the top performer last year with a 96 per cent return. Recent retail buying has pushed it deeper into the overbought region with the 14-day relative strength index at 79.8.

The bourse is trading at a forward price-to-earnings (P/E) ratio of 17.2, one of the highest among emerging markets, compared with 13 in Asian markets and 11.9 in global emerging markets, Thomson Reuters StarMine data showed.

The rupee closed weaker at 110.95/111.05 a dollar from Wednesday’s 110.92/95 on heavy importer dollar demand. Reuters quoted dealers as saying the rupee rose to 110.75 in the early trading after the IMF announcement.

source - www.ft.lk