Feb 07, 2013 (LBT) - Bourse reverted to green amidst strong across the board participation focused primarily on banking & diversified sectors as the benchmark index peaked at 5,825.4 (+45 points), before losing some ground amidst retail profit taking. The index closed with a 30.3 point advance, the biggest gain in two weeks, whilst the S&P SL20 also secured a 26.3 point gain to close at 3,243.7 points. The banking & telco sector play led the gains of the benchmark index with notable positive contributions stemming from Sampath Bank (+4.9%), Lanka Orix Leasing (+3.7%), Commercial Bank (+1.1%) and Dialog Axiata (+1.1%). The turnover was lifted to LKR1.5 bn supported by 14 crossings recorded during the day constituting c.52% of turnover.
As we continued to stress on the attractive valuations of the banking sector players, it has proved to be correct with investors now flocking into the steady plays in the sector trading at attractive multiples whilst generating outstanding dividend yields as well. The sector outlook remains promising with the removal of the credit ceiling coupled with the expected ease in pressure on margins as the downtrend in government yields would transfer to the market interest rates as well (anticipated within next 2-3 months). Despite the recent price appreciations in the sector counters, most of the steady banking stocks still remain at attractive levels with considerable upside potential. Below is a summary of sector valuations at current price levels.
Hatton National Bank continued to witness large off- market deals amidst heavy foreign investor participation in the counter. 5 crossings in the counter accumulated to c.1.9 mn shares each traded at a set price of LKR144.0. The counter spearheaded the day’s turnover as it advanced a marginal 0.7% to close at LKR146.0. Following substantial foreign accumulation in Sampath Bank, the counter continued to witness heavy investor interest as it proceeded to register further 2 off-market blocks totalling 500k shares at LKR239.0 (+5.8% premium to the yesterday’s close). The counter recorded several large on-board deals as well as it renewed its 52-week high at LKR237.0 (+4.9%), where it closed at a similar price. Another banking heavyweight, Commercial Bank of Ceylon proved to be active amidst considerable on-board deals including a 940k share parcel at LKR109.1. Further buying interest was notable in National Development Bank and Nations Trust Bank as well with each advancing 2.6% & 1.7% to close at LKR148.9 & LKR60.0 respectively. Diversified sector play continued to be highlighted in John Keells Holdings & Aitken Spence. The former recorded 4 crossings carrying c.900.4k shares at prices LKR228.5 & LKR229.6. Sizeable on-board deals were also recorded in both the counters where the latter advanced marginal 0.4% at its close of LKR124.5. Interest continued in Chevron Lubricants as the counter saw a block of 500k shares taken at LKR221.0, whilst two parcels carrying 1.4 mn shares were crossed off in Lanka Orix Leasing at LKR69.0 each. Despite on thin volumes, buying interest was also visible in Ceylon Cold Stores, Carson Cumberbatch, Royal Ceramics & Nestle Lanka. Meanwhile following the attractive earnings release, Dipped Products saw its price shot up to touch a 52-week high of LKR114.0 as it closed with a 5.9% advance at LKR112.2. Retail play remained subdued with some interest being witnessed in People’s Merchant Finance, Environmental Resources Investment, E-Channelling, Vallibel One and Nations Lanka Finance.
European Stocks Are Little Changed: European stocks were little changed as companies from Sanofi to Vodafone Group Plc posted results and investors awaited policy announcements by the European Central Bank and the Bank of England. The Stoxx Europe 600 Index rose 0.1% to 284.82 at 8:27 a.m. in London. Futures on the Standard & Poor’s 500 Index expiring in March slipped 0.1% and the MSCI Asia Pacific Index lost 0.2%. Oil Fluctuates as Fuel Demand Gains, Cushing Stockpiles Shrink: Oil fluctuated after a report showed US fuel demand climbed while crude supplies shrank at Cushing, Oklahoma, the biggest US storage hub and the delivery point for the New York-traded contract. Crude for March delivery was at USD96.52 a barrel, down 10 cents in electronic trading on the New York Mercantile Exchange at 3:43 p.m. Singapore time.