Stock market produces strong recovery but turnover low as investors keep away

The battered Colombo stock market yesterday produced a strong recovery with both indices gaining sharply though turnover was low as perplexed investors kept away.

The All Share Price Index gained by 6% and the S&P SL20 jumped by 7% in one of the sharpest rise in recent months. Turnover was Rs. 1 billion involving 62 million shares.

Until yesterday, ASPI was down 32.5% and S&P SL20 by 36.5% prompting Bloomberg to label the Colombo Stock Exchange as the second-worst performer after Russia.

Asia Securities said following six sessions of price declines, the indices returned to positive territory on Tuesday boosted by sharp gains in EXPO (+9.2%), BIL (+13.8%), LOLC (+13.1%), LOFC (+13.0%), SCAP (+23.2%), and HAYL (+11.7%).  The indices recorded their biggest single-day gains in three weeks with the ASPI gaining 494 points and the S&P SL20 index gaining 187 points. However, retail and HNI activity was subdued throughout the session.

Foreigners continued on the buying side recording a net inflow of Rs. 36mn, led by net buying in MELS (Rs. 34 million) and VFIN (Rs. 13.2 million). The breadth of the market ended positive with price gainers outnumbering decliners by a wide margin of 175 to 35. First Capital said the bourse thrived in the green as investors set on a bull rally hoping to see a light at the end of the tunnel with recent developments that took place in the country after back-to-back losses owing to the crisis. 

Amidst restricted market hours index escalated shortly into the opening as buying interest emerged and continued to remain on an upward trajectory peaking to an intraday high of 8,793 as optimistic investors indulged on a bargain hunt following significant price declines from previous sessions. However, during the latter part of the session index slightly edged down but managed to hold out in the green before closing for the day at 8,738 gaining 494 points. Intraday gain was at a three-and-a-half-week high while SAMP and LOLC contributed largely to the surge in the ASPI. 

Turnover was led by a joint contribution of 49% from the Transportation sector and Food, Beverage and Tobacco sector.