Saturday, April 2, 2011

Bourse enjoys big gain

The Colombo stock market yesterday recorded one of its highest recent day-gains helping it to soar to three week high as renewed foreign interest spurred local sentiments.

The benchmark All Share Index gained by 151 points or 2% to close at 7,377 points, highest since 11 March whilst the Milanka Index enjoyed a similar gain as well.

Turnover was relatively low at Rs. 1.6 billion, which was attributed to lack of sellers given the re-rating of prospects in the market since Thursday’s gain on the strength of new foreign interest. Incidentally the market recorded its second consecutive day of net inflow yesterday.

“The indices rose sharply on renewed buying across the board amid moderate activity levels with moderate foreign participation accounting for a net inflow,” John Keells Stock Brokers said.

On Thursday net foreign inflow was Rs. 700 million whilst yesterday it was around Rs. 53 million, low in line with below average turnover. The two days of net inflow has boosted investor sentiment as non-nationals have been net sellers to the tune of Rs. 6.9 billion year to date on top Rs. 26.4 billion in 2010.

Premier blue chip JKH which is a proxy for the market among foreigners, shot up by Rs. 10 to close at Rs. 295.60 whilst it hit an intra-day high of Rs. 297.90. Despite demand there weren’t willing sellers as only 356,900 JKH shares traded.

Distilleries Company was the main contributor (Rs. 159 million) to the market turnover with a crossing of 800,000 shares at Rs. 180. The share price increased by Rs. 2.30 (1.28%) and closed at Rs. 182.  Foreign holding of the company increased by 766,700 shares.

DFCC Bank which announced an interim dividend of Rs. 7 per share saw its stock price increase by Rs. 10.80 or 1.11%. Aitken Spence, Hayleys, Hemas were among other notable gainers among blue chips.

NDB Stockbrokers said retail investors showed interest across the board with freedom with the end of credit clearance on Thursday. “Blue chip counters continued to surge which helped indices to gain. All the sector indices gained today,” it added.

Bank, Finance & Insurance sector was the main contributor to the market turnover (mainly due to Central Finance) with the sector index increasing 1.63%.

Manufacturing sector also contributed to the market turnover (due to Ceylon Grain Elevators and Piramal Glass) with the sector index increasing 2.52%. Lanka Floortiles also announced an interim dividend of Rs. 2.50 per share but its share price dipped by 70 cents to Rs.130.40.

Reuters said that analysts had said worries over inflation may hurt the market with a possible supply disruption due to ongoing turmoil in the oil-producing Middle East and North Africa. Oil rose on Friday, with Brent nearing $118.  Government data showed March inflation year-on-year rose beyond forecasts to a 26-month high of 8.6 percent.

The bourse is trading at a forward price-to-earnings (P/E)ratio of 15.2, one of the highest among emerging markets, compared with an average 12.5 in Asian markets and 11.7 for global emerging markets, Thomson Reuters StarMine data showed.  Colombo is still Asia’s best performer in 2011 with an 11.2% gain, after bringing in the region’s best return of 96% last year.

The rupee closed flat at 110.38/40 a dollar from Thursday’s close after it trades at 110.20 on exporter conversions but bounced back on state bank buying, dealers said.

source - www.ft.lk

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