Thursday, January 17, 2013

CSE soars despite chaos over CJ

■ Market’s value swells by Rs. 24 b

■Net foreign inflow tops Rs. 500 m

by mid-month

 Investor sentiments at the Colombo Bourse appear to be unscathed by the crisis over the change in the country’s Chief Justice, as the market’s value swelled by Rs. 24 billion yesterday in one of the highest day-gains in recent times and foreigners continuing with buying.

The rise of 62 points propelled the benchmark ASI to over 5,800-point mark for the first time since October last year. The sharp rise also broke the seven-day stagnation period. Market capitalisation rose by Rs. 24 billion to close at Rs. 2.32 trillion. The ASI’s gain peaked to 83 points before cooling off a bit. The day’s gain was the highest in five weeks.

 Despite rebound in sentiments, which analysts linked to the Chief Justice issue coming to finality, turnover was relatively low at Rs. 636 million, though some opined there was notable across-the-board buying interest.

 Foreign investors continue to be bullish, with a net buying of Rs. 112 million, on top of Rs. 190 million on Tuesday.

 Though early in the New Year, the net foreign inflow has topped the Rs. 500 million mark by mid-January. Last year was a record with Rs. 39 billion net foreign inflow.

 Year-to-date, the Colombo Bourse is up 3%, showing early signs of recovery after it dipped by 7% in 2012.

“The continuous decreasing trend witnessed in the Treasury rates and the resolution of the political debacle over the impeachment of the Chief Justice would have presumably uplifted investor sentiments,” noted Asia Wealth Management. Lanka Securities said stocks rallied ahead of the Central Bank’s Monetary Policy review to decide on the direction of policy rates.

Softlogic Stockbrokers said market heavyweights Sri Lanka Telecom, Ceylon Tobacco, Carsons Cumberbatch, and Chevron Lubricants were instrumental in the ASI’s gain. The S&P SL20 also traded on a similar pattern, up by 30 points.

“We welcome the market rally with fundamentally-backed players being at the centre-stage, amidst improved market sentiments across the board,” Softlogic said.

“Notably some reactivation of retailers was witnessed, which we believe needs further momentum for the Bourse to sustain gains whilst supporting overall participatory levels,” it added.

 Softlogic also said the continued drop in Government yields had started to gradually reflect on equities, which it expects to elevate further as the market interest rates would follow the declining trend over the short term, hence further enhancing the attractiveness of the equities.

“In this backdrop, we expect local retail investor participation to gather considerable momentum within the next few months. Hence, we advise the value seekers to fasten up accumulation in the steady players with increased cash allocation as we expect the market to generate attractive returns, particularly with the reversal of the rising interest rate environment,” Softlogic said.

 Yesterday premier blue chip JKH extended buying interest spearheading the day’s turnover as the counter recorded the only crossing, carrying 225,000 shares at Rs. 225 each. Several large deals were also drawn on-board in the counter, including a 150,000 share block as it closed with a marginal price gain at Rs. 225. Substantial investor activity was notable in Softlogic Holdings as the counter recorded several on-board trades as it touched a high of Rs. 13.2, before closing at Rs. 13 with an 11.1% advance.

 Ceylon Tobacco continued to renew its 52-week high price amidst buying interest touching Rs. 950, where the counter closed with a 2.8% gain at Rs. 899.4.

 Buying interest was also notable in banking and finance sector counters Hatton National Bank (-0.3%), Commercial Bank of Ceylon (+0.0%), People’s Leasing & Finance (+4.2%), Nations Trust Bank (+2.7%), and DFCC Bank (+1.3%).

 Further, Chevron Lubricants and Asiri Hospital Holdings both renewed their 52-week high prices at Rs. 227 and Rs. 12.2 respectively. Large on-board deals continued in Dialog Axiata whilst Sri Lanka Telecom also grabbed considerable attention, Softlogic Stockbrokers said.

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