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Monday, February 14, 2011

S. Lanka stx at record on speculative oil palm buying

* High cap palm oil and related shares boost index

* Analysts say surge unwarranted fundamentally

* Rupee down on importer dlr demand

COLOMBO, Feb 14 (Reuters) - Sri Lanka's stock market surged 3 percent to hit a new record high on Monday led by speculation in shares of large-cap palm oil firms triggered by booming commodity prices.

The island's main share index .CSE hit an all-time intraday high of 7,847.32 before closing 2.97 percent or 225.19 points firmer at a new closing high of 7,811.82. The day's percentage gain was highest since Aug. 10, Reuters data showed.

Analysts said the frenzy into oil palm-related shares was primarily speculative, after Malaysian palm oil futures touched near a three-year high last week. They slipped slightly on Monday. [ID:nL3E7DE09W]

The Colombo oil palms sector index .CSEOP hit a record high with conglomerates Bukit Darah BUKI.CM and Carsons Cumberbatch CARS.CM gaining 32.1 percent and 25.1 percent.

Bukit Darah is the holding company of Carsons, which produces palm oil in Malaysia. Listed firms like Good Hope Plc GOOD.CM, Selinsing Plc SELI.CM, and Shalimar Plc SHAL.CM, in which either Carsons or Bukit Darah has a stake, surged by around 50 percent on Monday.

Foreign investors sold a net 157.9 million rupees' worth of shares on Monday, extending the total net foreign outflow to 5 billion rupees so far in 2011, after selling a record net 26.4 billion in 2010.

The bourse has been Asia's best performer with a 17.7 percent gain in 2011 after being the top performer last year with a 96 percent return. Heavy retail buying has pushed it deeper into the overbought region with 14-day relative strength
index at 90.1.

Turnover was 5.3 billion rupees ($47.6 million), more than two times of the last year's 2.4 billion rupees and this year's daily average 4 billion rupees.

Traded share volume was 90.7 million, against a five-day average of 107.2 million. The 30-day and 90-day average trading volumes were 101.3 million and 70.1 million respectively. Last year's daily average volume was 69.2 million.

The bourse is trading at a forward price-to-earnings (P/E) ratio of 16.7, one of the highest among emerging markets, compared with 12.8 in Asian markets and 11.7 in global emerging markets, Thomson Reuters StarMine data showed.

The rupee LKR= closed weaker at 111.08/10 a dollar from Friday's 111.03/06 on heavy dollar demand, dealers said.

FACTORS TO WATCH:

- A technical correction in the bourse

- Lending rate movement after the central bank kept policy rates steady [ID:nSGE71201O]

- The extent of the rupee appreciation the central bank will allow to curb inflation from expensive imports

source - www.reuters.com