he Colombo Bourse yesterday produced an encouraging rebound largely
powered by improved sentiments following a capital market stakeholder
meeting with Finance Ministry Secretary Dr. P.B. Jayasundera on Tuesday.
After a sharp rise in early morning trade, the market cooled off with
a degree of profit taking with the ASI closing up 0.3% or 15 points to
4,960, the highest since June 29. Market’s value rose by Rs. 7 billion,
one of the highest day gains of late.
“Trading on the bourse opened on a positive note supported by last
Tuesday’s meeting between government officials and brokers aimed at
addressing market concerns and uplifting investor sentiment,” DNH
Financial said adding the market saw relatively improved investor
Market turnover rose to Rs. 754 million with trading in premier blue
chip John Keells Holdings, banking heavyweight Hatton National Bank and
new diversified entity PCH Holdings accounting for 25% of the day’s
“Sentiments bloomed as investors were confident after the Secretary to
the Treasury’s promised to reconsider credit rules, one of the
backslappers of the bourse,” said Softlogic Stockbrokers. “With the
caption of the high index counters on top of the turnover list, with
some silent accumulation taking place, the confidence level in the
earnings of these companies is highlighted. John Keells Holdings,
Distilleries Company of Sri Lanka, Sampath Bank, Commercial Bank, Ceylon
Tobacco and DFCC Bank; have all taken the top slots of turnover
rankings for the day,” it added.
Reuters also said the market gained on hopes the Government will act to
revive trading on an exchange that has fallen 18 percent so far this
“The market has responded positively to the (Treasury) meeting outcome,
but it will take a lot more time to see policy action being
implemented,” Reuters said quoting an unnamed stockbroker.
The action includes an enhanced credit facility to revive retail
investor interest in the short term and steps to build broker capital
infrastructure in the medium term.
NDB Stockbrokers headlined its report as “Bullish sentiments” and said
multinational Ceylon Tobacco Company touched the Rs 700.00 mark, while
heavy weight John Keells Holdings attracted institutional and high net
worth interest. The counter witnessed two parcels changing hands to end
the day with a marginal gain. Hatton National Bank saw a parcel changing
hands at a premium price while a significant block of PCH Holdings also
got traded during the latter part of trading. The share price of John
Keells Holdings gained Rs 1.10 (0.60%) to close at Rs 185 whilst the
share price of Hatton National Bank increased by Rs 0.80 (0.60%) to
close at Rs 134.
Accumulation was evident in Distilleries Company as the counter saw a 150,300 share block being taken on board at Rs. 120.
The poultry feed miller’s charm of 366% YoY growth in earnings for
2Q2012 have led the retailers to blindly involve in the counter as it
was seen reaching a high of Rs. 51.90 before its close at Rs. 50.60 (up
2.25%). Softlogic Equity Research has signaled investors to be cautious
on the counter as Ceylon Grain Elevators’ earnings has been led by
one-off gain in disposal of its associate as it continues to battle with
working capital issues created by dollar appreciation, gross profit
margin pressure and high finance cost.
Acme Printing & Packaging topped the speculative play list as it
was seen rallying as much as Rs. 16.2 before settling at Rs. 15.5 at
close. Retail participation was prominent in Colombo Fort Land &
Building, Lanka Hospital Corporation, Fee Lanka Capital, Kalpitiya Beach
Resorts, E Channelling and Blue Diamonds [Non-Voting].
Foreign investors were net buyers of Rs. 102.5 million extending the
net foreign inflow this year to Rs. 25.7 billion ($194.92 million).
The rupee meanwhile closed steady at 131.70/132.10 against the dollar, as importer dollar demand offset banks dollar sales.
Dealers expect the rupee to weaken further on expected importer dollar demand.
DNH Financial in its daily report said despite the country’s robust
macro-economics (notwithstanding the current inflationary pressures), it
is very disappointing to note that the Sri Lankan bourse has
significantly underperformed the majority of global markets this year
having declined by 31%YTD in dollar terms.
“While most market commentators have cited no credible reason for the
market’s decline, we believe that it is purely a matter of negative
domestic investor sentiment that has stifled investment flows into the
bourse over the last couple of months, although in contrast, foreign
investors have been cherry picking investments especially in blue chip
counters. Consequently, we believe the biggest risk to the bourse now is
not one of fundamentals but that of negative domestic investor
sentiment that is denting performance and barring the market from
re-rating to higher levels. We advise domestic investors to break away
from the herd and select bluechip stocks with a medium to longer term
investment horizon,” DNH Financial added.
Last edited by GMNet on Fri Aug 03, 2012 8:23 am; edited 1 time in total (Reason for editing : Excess space removed)