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Saturday, July 16, 2011

Bargain hunters boost Bourse

Fresh buying demand props market’s value by Rs. 21 b; Net foreign inflow of Rs. 153 m

Return of bargain hunters and improved buy sentiment yesterday propped the Colombo Bourse’s value by Rs. 21 billion bringing the last two market days’ gain to Rs. 40 billion.

The benchmark ASI gained by 62 points but more importantly MPI shot up by 121 points whilst turnover was Rs. 1.95 billion.

“The gain on the more liquid index was led by the price gains made in the heavy index counters such as John Keells Holdings, Aitken Spence, Commercial Bank and Sri Lanka Telecom,” Arrenga Capital said. The counters registered price appreciations of 5.08%, 2.77%, 1.92%, and 1.53% respectively. Lanka Orix Finance Company, with a 1.4% weight on the total market capitalisation registered 5.26% gain for the day.

Following a weekly purchase of 9.7 mn shares by Softlogic Holding’s Chairman, the counter witnessed heavy investor participation topping the day’s turnover and most active list with a contribution of 27.1% of the day’s turnover level. Despite yesterday’s gain of 9.2%, the counter remained below its IPO price. Central Finance registered two crossings counting to 134,500 shares being transacted at LKR 1, 400.00.

Foreign buying interest was evident in Expolanka Holdings. This led the counter to touch an all time high of LKR15.30 after its high of LKR15.00 on its initial trading day. Swarnamahal Financial Services continued to sustain its position among the top performers as it gained another 18.53% to close at LKR124.09. Vallibel One maintained its position, since its debut, closing at LKR31.70 with 109 mn shares being traded.

Moreover, HNB Rights, which commenced trading, registered a 900% gain whilst Ceylon Cold Store Rights went on to be the top price loser for the day closing at LKR73.50.

Yesterday’s overall gain was reinforcing the improved sentiment. The Rs. 21 billion increase in market capitalisation was on top of Rs. 19 billion rise on Wednesday. The Rs. 40 billion increase partly offset but didn’t fully erase the Rs. 65 billion loss in value on Monday and Tuesday combined.

Most analysts are encouraged by the two consecutive days of gain which they said augurs well when the market opens on Monday.

“Buying mood has returned perhaps most sensing new opportunities,” one broker said. However another said the market was far from recovery and true test would be if the Bourse remains positive throughout next week.

Last two days of gain pushed the year to date increase in ASI to over 2% whilst MPI languishes with a negative return of 10.6%.

Reuters said the ASI at 6,777.03 points yesterday was the highest since 8 July. It fell 3.6 percent in the first two sessions this week to hit a six-month low before recovering in thin volumes.

The market’s 14-day relative strength index gained to 36.4 from an oversold 30 in the previous session, Thomson Reuters data showed.

Reuters said largest conglomerate John Keells Holdings jumped 6.7 percent on Friday as the share has been oversold in the last three sessions, Thomson Reuters data showed. Since 1 June, the index has shed 8.26 percent, mainly due to forced selling in line with the policy of Sri Lanka’s Securities and Exchange Commission (SEC) to recover margin debt, aiming to eliminate all credit dealing by year’s end.

The bourse is still up 2.13 percent so far this year. It was the top performer in the Asia-Pacific region in 2010 and 2009 with 96 percent and 125 percent returns, respectively.

The day’s turnover was 1.96 billion Sri Lanka rupees ($17.9 million), below the last year’s average of 2.4 billion and this year’s daily average of 2.77 billion.
Foreign investors were net buyers of 153.2 million rupees on Friday, but they have sold 7.14 billion rupees in 2011 after a record outflow of 26.4 billion in 2010.

Traded volume was 85.1 million, lowest since July 7, against a five-day average of 95.9 million. The 30-day and 90-day average trading volumes were 167.8 million and 105.2 million, respectively. Last year’s daily average was 67.9 million.

The rupee meanwhile ended firmer at 109.49/50 a dollar from Wednesday’s close of 109.58/60 as central bank lowered the dollar trading band by 10 cents to 108.90/109.50 from 109.00/60, dealers said.

The markets were closed on Thursday for Poya.

source - www.ft.lk