How brokers reviewed yesterday’s resurgence of Colombo Bourse

Asia Wealth Management said the market bounced back in the wake of renewed institutional and high net worth interest where both the indices shot up more than 100 points

SC Securities said the market witnessed a blissful atmosphere today as investors turned positive which carried the Colombo benchmark index, the All Share Price Index (ASPI) to 6,452.28 points at the end of trading, surging 2.71% (170.43 points) over yesterdays’ close.

The Milanka Price Index (MPI) climbed 2.48% (139.40 points) to end the day at 5,743.55 points. Considerable gains were recorded across the board with retail participation seeing a distinct rise.

Lanka Securities said Colombo stocks rebounded strongly from the major support level and recorded significant gains backed by the rumor of transferring SEC Chief, Malik Carder to a senior advisory position in the Ministry of Finance and which was officially confirmed later.

NDB Stockbrokers said the day started on a positive note and the ASPI and MPI closed in green.

Though the performance was exceptional compared to the recent past, turnover levels were not impressive. Interest resumed in speculative stocks. Thin volumes cast doubt over the sustainability of the upturn.

DNH Financial said Reversing weeks of lackadaisical movement, the ASPI and MPI gained 2.7% and 2.5% to close at 6452 and 5744 as a result of across the board gains in the market.

While the current upward movement in the market is encouraging, the question facing many investors is whether today’s rise is sustainable or is it indeed a flash in the pan? Notwithstanding today’s gains, the majority of stocks that have announced their 3Q2011 results possess valuations of single digit indicating a strong buy signal for bottom up investors seeking medium to longer term gains.

Despite the likelihood of a general rise in the index over the next few days, we advise investors to be selective and focus on quality stocks that will outperform in the medium to longer term rather than following the herd.

Arrenga Capital said the stock market staged a bullish run with gainers outperforming losers by 199 to a mere 13.

This seem to be the investors’ most awaited day as most of the dormant players awakened after citing a strong green flag ruling out the bearish mode.

Investors, who made use of the previous short-term fear, when they had invested in the steady counters which touched 52-week lows, saw their portfolio values reach high levels today. Downward pressure in the Sri Lankan stocks proved to be unstoppable since 16.08.2011 when it continued to glide down except for marginal gains with those short term rallies.

A function of investor fear and tight Regulatory grip in the stock market had silenced many investors recently.

An across the board fresh round of buying was evident since the morning as the ASPI hovered as much as 6,490.89 points (up 209.04 points) before its close at 6,452.28 points.  YTD performance recouped from its decline of 5.3% to -2.8% creating room for Sri Lankan equity to move ahead from its 8th position as Asia’s best performer.

 A healthy LKR1.5 bn turnover was registered as activity levels rebounded strongly as the local investor committee wound up for the market hail.

Volume levels proved to be strong as it crossed 100 mn after 19 trading days, when volume averaged to a mere 63.3 mn shares.

But the question on the sustainability of rally remains unanswered. This is anyway an expected rally after an oversold situation by the technical analysts. Based on the day’s reading of investor sentiments, we believe that the market would finally start reacting to the earnings season.