Thursday, February 9, 2012

Tumbling 10 for Bourse

For the Colombo stock market yesterday marked the imperfect 10 as the negative return passed the double digit figure for the first time this year dwarfing the 8.4% full year dip of 2011.

The Rs. 43 billion loss in value also saw market capitalization sink below the Rs. 2 trillion mark whilst the ASPI lost 119 points sending fresh wave of concerns within and outside the Colombo bourse.

Colombo is the worst performer among Asian markets with a 10.41% loss so far this year. It was 10th-best in 2011, after being on top in 2009 and 2010.

Analysts attributed the negative sentiments to the perceived gloomy outlook on the economic front on account of rising interest and exchange rates as well as spillover effect from external shocks such as sanctions against Iran, pressure on oil prices and recession in the West.

“Both indices ended in the red with the All share index closing at 5,442.25. Market continued to dip 119 points due to the central bank increasing interest rates by 50 basis points and margin calls also contributed to the dip,” New World Securities said.“Prominent retail selling was largely instrumental in bringing down the prices,” NDB Stockbrokers added.

Arrenga Capital said Colombo bourse extended losses for the sixth straight session as the indices registered their biggest drop in two weeks leading the benchmark ASPI to register a record low since 18.08.2010. 

It took comfort in foreigners remaining quite active in a blood red market, as the day recorded a net foreign inflow of Rs. 239 million with overseas purchases making up nearly 40% of the day’s total turnover.

“This signals that the accumulation continues silently as the fundamentals get better by day,” Arrenga opined adding that following the slump the market now trades at a four quarter trailing PER of 11.8X. 

It said persistent interest in heavyweight John Keells Holdings, led it to top the turnover list with a circa 15% contribution. The counter recorded a further crossing of 170,000 shares being transacted at Rs. 165.0 per share. The counter after trading between a range of Rs. 164 – Rs. 170 closed with a dip of 1.6% at Rs. 164.9.

Another diversified sector player, Expolanka Holdings, saw renewed foreign participation as the counter saw two parcels totalling to 9.4 million shares being dealt at Rs. 7 per share (a 50% discount to its IPO price). Food & Beverage sector player Nestle Lanka, also witnessed renewed activity as the counter registered a block of 50,100 shares being traded at Rs. 916.0 per share. The relatively illiquid, attractive dividend paying counter closed with a gain of 1.6% at Rs. 915.0. 

Interest was visible in banking sector players, Commercial Bank of Ceylon [Voting & Non – Voting], Hatton National Bank [Non – Voting], Seylan Bank [Non – Voting], albeit all closed denoting losses.

Interest continued in Distilleries, whilst buying interest emerged in conglomerate Aitken Spence, as it closed with a marginal gain in a bear market. Speculative play continued in Environmental Resources Investments and its Warrants [W : 0006, W : 0003], as the counters closed topping price losers’ list indicating losses of 9.4%, 15.8% & 15.3% respectively.

Manufacturing sector player Tokyo Cement, saw considerable activity as it saw several large trades being handled in the market. The continued upward movement in Swarnamahal Financial Services over the past few weeks, came to a halt, as the counter settled to close with a marginal dip at LKR160.5.

However, the counter still trades at its 52 – week high. Retail participation was also evident in Colombo Land & Development and Asia Asset Finance

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