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Friday, July 29, 2011

Bourse rebounds anticipating regulatory relaxation

By Jithendra Antonio

The Colombo bourse closed for the third consecutive day, anticipating regulatory relaxation on the much debated broker-credit issue which has dragged the market down in the recent past with over-priced IPOs.

“This upward trend is not sustainable as it is based on mere wishful thinking. Overall market sentiment needs foreigners and foreign funds, but US debt crisis has created some negative sentiments for foreigners to invest in stock markets around the world.” Hijas Suhair, Assistant Manager, Corporate Advisory MBSL said.

“All these rallies might be short-term, and we will see the real performance if the SEC allows the brokers’ request,” another analyst from the Unit Trust Industry said.

According stockbrokerage officials, at a meeting held on Monday, almost all the Chief Executive Officers of stock broking firms agreed and signed letters stating that brokering firms should be able to lend their excess funds above the minimum capital requirement to their trade debtors.

According to Lanka Securities, Colombo Stock market rebounded sharply as benchmark ASI soared to year-to-date high.

ASI advanced by 147.27 index points (2.22%) to close at 6,652.83 while the more sensitive MPI closed at 6,078.13, up 134.22 index points (2.26%).

“The advancing shares far outnumbered the decliners. 229 shares rose while only 21 ones fell and 14 counters closed with no changes” the report noted.

Daily market turnover was Rs.1.5bn. Out of the total turnover, Rs.926.9 mn cash flowed into the market while Rs.569.7 mn cash flowed out. Market RSI based on All Share Index increased to 42.3 from the previous figure 29.3. Volatile price trend was seen in the speculative counter Swarnamahal Financial Services, and Lanka Securities also said corporate earnings for the Mar-June quarter boosted investor activity on premier counters.

“Poultry sector counters witnessed notable activity levels during the day and closed with considerable gains.

Ceylon Grain Elevators up Rs.16.20, Tree Acre Farms up Rs.22.50 and Bairaha Farms up Rs.24.80.

Further, Vallibel One, Nation Lanka Finance and Browns Investments were among the mostly traded counters,” the report noted.

Foreign participation was lower, however slightly improved to 7% from yesterday’s figure of 3%. Foreign investors ended as net sellers with a net foreign outflow of Rs.131.6 million.

source - www.dailymirror.lk