CSE starts fresh week on a negative note

The Colombo stock market yesterday began a fresh week on a negative note, amidst satisfactory turnover.

The ASI dropped by near 23 points and MPI by 16 points at close, though early morning trading was bullish. Net foreign outflow amounted to Rs. 233 million.“Retail interest on Tess Agro continued while most other retail counters witnessed profit taking. Motor sector also showed some interest with UML and DIMO closing on a positive note,” NDB Stockbrokers said.

Arrenga Capital said renewed investor participation was also evident in Dipped Products, which led the counter to register a price gain of 5.89% to close at Rs. 125.9. Institutional participation on heavy weight counters John Keells Holdings and Bukit Darah led the counters to register a block of 700,000 and 25,000 shares each being transacted at Rs. 215 and Rs. 1,070 per share respectively.

Furthermore, heavy index counters Distilleries and Aitken Spence also saw some participation, with the former registering a price gain of 0.52% to close at Rs. 175.1. United Motors Lanka continued to gather interest from retail and high net worth individuals following Friday’s momentum whilst interest was also evident in Colonial Motors, Arrenga said. Investor participation in both the voting and non-voting shares of The Finance Company was visible following a media release yesterday relating to the company’s future potential by The Finance Company Chairman Preethi Jayawardena. The counters registered price gains of 10.5% and 10.9% respectively.

Furthermore, interest was also evident in finance sector counters, Central Finance Company and Nation Lanka Finance, which recorded gains of 2.96% and 2.45% respectively. Miramar Beach Hotel and Beruwala Walk Inn gathered some interest for the day appreciating by 15.6% and 11.2% to close at Rs. 305 and Rs. 183.80 respectively.

DNH Financial said despite opening the week on a high note, the ASPI shed its mid morning gains to close the session 0.3% lower at 6968. Reflecting the relatively subdued trading levels, market turnover declined by 31% to Rs. 2.3 billion with trading in Tess Agro, Ascot Holdings and John Keells Holdings accounting for 31% of the day’s total.Losers outpaced winners with Associated Motor Finance, Alufab and Colombo Investment Trust reporting the largest declines offsetting gains in Ascot Holdings, Tess Agro and Gestetner which advanced by 31%, 30% and 26.3%.

DNH said global stocks dropped sharply while the euro sank to a 10-year low against the yen, compounded by the resignation of a top ECB official which cast further doubt on the region’s ability to manage its deteriorating credit crisis. Meanwhile, gold futures declined 0.4%, to $1,852.10 an ounce on the back of a stronger dollar, as both commodities and equities sold off across the board.

“While the domestic structural story appears intact combined with strong corporate earnings largely across the board, what the market appears to be lacking right now is a bout of momentum which should provide the necessary trigger to rerate the market to higher levels,” DNH opined.





“This impetus we believe will spring from the run-up to the 3Q2011 results, which are expected to continue to record strong double digit. Our advice to investors consequently is to build a portfolio of the most compelling companies in the ASPI that will not only benefit fully from the current macroeconomic upswing, but will also reflect the most robust 3Q2011 corporate results while exhibiting strong price momentum,” the broking firm added.