Thursday, January 24, 2013

Local deals and buying boost Bourse as foreigners turn YTD net sellers

Local institutional and individual investors took positions boosting the Colombo Bourse yesterday, whilst selling by foreigners in the past few days has resulted in them being net sellers year-to-date.

The ASI gained by nine points and the S&P SL 20 index improved by over 10 points on a day turnover crossed the Rs. 2 billion mark. Lanka Securities said cash map was 51% with foreign participation at a lower 35% of turnover with a buying of Rs. 629 million and selling of Rs. 854 million.

“Buying interest in the Colombo Bourse was retained with active participation being observed among all types of investors,” noted Softlogic Stockbrokers, whilst Lanka Securities said the market returned to positive territory with investors denoting interest on selected stocks. Asia Wealth Management said the turnover was largely driven by institutional and investors through nine crossings.

 NDB Stockbrokers said foreign investors remained active with a net outflow of Rs. 225 million mainly owing to Commercial Bank.

 Softlogic estimated foreigners to have turned to net sellers, bringing the year-to-date figure to Rs. 100 million for the first time in 2013. Foreigners accounted for net inflow of Rs. 38 billion last year. The Bourse however so far is up 4%.

 Though NDBS noted retail activity remained lacklustre, Lanka Securities said retail activity remained strong on few mid capped counters. It also said yields on all three maturing Treasury bills falling further yesterday would positively impact the performance of the equity market. It also added that the market rebounded with the help of blue chips such as NestlĂ©, People’s Leasing and Finance, Distilleries, and a few banking sector shares.

 Softlogic also said the drop in interest rates had reactivated the market with the retail investors who were on the sidelines now slowly but surely entering the market.

“However, currently the market has gained about 1,000 points from its bottom in 2011. The growing earnings and the dip in the index have maintained the Colombo Bourse at attractive valuations. Despite the 1,000 point gain, the attractiveness of market still remains intact as it trades at 10x FY14E earnings,” Softlogic added.

 Whilst related party deals on Browns Investments accounted for 35% of the day’s turnover, interest among large foreign and local investors in Commercial Bank continued to be highlighted as the counter recorded six crossings accounting for 6.4 million shares at Rs. 104 each. The counter further registered an on-board block of 172,000 shares at the same price before it finally closed the day with a marginal dip of 0.6% at Rs. 104.2.

 Other banking sector counters Hatton National Bank and National Development Bank gained investor attention. Investor attention continued to focus on the finance company segment with keen interest particularly being recorded in Lanka Orix Leasing, People’s Leasing, People’s Finance, and Central Finance.

 Speculative counter Environmental Resources Investment witnessed both on-board and off-board interest while its warrants W0003 and W0006 too generated retail interest.
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