Politics, profit taking checkmate Bourse rebound

Wednesday, 3 December 2014 00:00 - - {{hitsCtrl.values.hits}}

Politics and profit taking yesterday checkmated two days of sharp gain at the Colombo stock market. “Volatility returned to Colombo Bourse on Tuesday after two consecutive days of gains, as investors reacted to the developments in the political front,” said Lanka Securities in an apparent reference to pro-Buddhist Jathika Hela Urumaya and a former ally of the President Rajapaksa Government yesterday pledging support to common opposition candidate Maithripala Sirisena. The reaction to politics was evident as the market remained positive in the first one and half hours of trading before sliding. News of JHU support to Sirisena, which was widely anticipated, broke around 10.30 a.m. Acuity Stockbrokers said profit taking resumed despite Monday’s pickup. “The market gained 34.09 points in the morning session but failed to maintain the positive momentum and declined sharply in the latter half,” Lanka Securities said. The main index lost 45.10 points (-0.62%) to end at 7,230.58. S&P SL 20 index lost 15.54 points (-0.38%) to end at 4,025.13. Asia Securities said: “The Colombo Bourse trended upwards during the first hour of trade continuing yesterday’s optimism; however, indices tumbled thereafter as sluggishness once again crept into the market.” Yesterday’s losses according to Lanka Securities were mainly driven by counters such as Nestle Lanka (closed at Rs. 2,110, -2.3%), Dialog Axiata (closed at Rs. 13, -0.8%) and Sri Lanka Telecom (closed at Rs. 47.30, -2.5%) contributed negatively to the market performance. Losers surpassed the gainers 112 to 86, while 53 equities remained unchanged. Asia said the day’s turnover came in below the 12-month average for the second consecutive day, due to lack of large transactions and drop in local investor participation. “However, foreign investors continued to be net buyers for the 19th straight session taking positions in selected stocks,” it added Access Engineering, which continued to secure its position in the top turnover contributors’ list, emerged as the day’s top turnover contributor, boosted by foreign investor interest. The share witnessed six crossings totalling 6.6 m shares changing hands at Rs. 38, while it witnessed a mix of retail and high net worth/institutional interest in the normal board. Commercial Bank of Ceylon (voting) came in next with the aid of few large trades executed in the normal board. In addition to the above, Lanka IOC witnessed a crossing of 500,000 shares at Rs. 60 and Tokyo Cement (voting) witnessed a crossing of 362,000 shares at Rs. 65. Meanwhile heavy trading activity was observed in counters such as Lanka Cement, Sierra Cables, Asia Asset Finance, according to Asia Securities. Top contributory counters towards the day’s turnover were, Access Engineering Rs. 305.1m, Commercial Bank of Ceylon (voting) Rs. 62.2m, PCH Holdings Rs. 53.8 m, Lanka IOC Rs. 51.4m and John Keells Holdings Rs. 42.5m. “Clients are booking profits and trying to buy at lower levels as they were expecting a correction after the market topped the 7,000-level,” Reuters reported yesterday quoting a stockbroker on condition of anonymity.

Rupee forwards end tad up on exporter, bank dollar sales

Reuters: Rupee forwards ended slightly firmer on Tuesday as dollar sales by exporters and banks outpaced importer dollar demand, dealers said. The spot currency and three-day forwards, or spot-next, were not traded after the Central Bank capped the currency at predetermined levels to prevent volatility. Central Bank officials were not available for comment. Dealers said four-day forwards, or spot-next-next, were actively traded, ending at 131.72/77 per dollar compared to Monday’s close of 131.80/90. “There were exporter (dollar) sales and bank (dollar) selling,” a currency dealer said. Overseas investors bought a net Rs. 456.7 million worth of government securities during the week ended 26 November. They sold a net Rs. 38.6 billion ($ 294.66 million) in the nine weeks through 26 November, data from the Central Bank showed.

Secondary market bond yields increase ahead of Primary auction

By Wealth Trust Securities Secondary market bond yields were seen increasing yesterday in thin trade ahead of the weekly Treasury bill auction due today. At today’s auction, a total amount of Rs 10 billion will be on offer with Rs 3.0 billion on the 182 day bill and Rs 7.0 billion on the 364 day bill. At last week’s auction, the weighted averages on the 182 day bill and the 364 day bill remained unchanged at 5.84% and 6.00% respectively, while the 91 day bill was not on offer. In secondary bond markets, selling interest saw yields on the eight year maturity of 01.07.2022 increase to a daily high of 8.30% against its previous day’s closing level of 8.15/25, the two four year maturities (i.e. 01.04.2018 and 15.08.2018) to highs of 7.20% and 7.30% respectively against its previous day’s closing levels of 7.15/17 and 7.27/30 and the three year maturity of 15.05.2017 to a high of 7.00% against 6.95/02. In addition, the nine year maturity of 01.01.2024 was seen quoted high, within the range of 8.30% to 8.50% as well. In money markets, the Open Market Operations (OMO) department of Central Bank was seen draining an amount of Rs 1.99 billion by way of a three day term repo auction at a weighted average of 5.97% as surplus liquidity stood at Rs 36.14 billion yesterday. The weighted averages on overnight call money and repo rates remained mostly unchanged at 6.06% and 5.83% respectively. Rupee remains stable In Forex markets, the dollar/rupee (USD/LKR) rate on spot next-next contracts closed the day mostly unchanged at Rs 131.73/75 yesterday. The total USD/LKR traded volume for the 01st December 2014 was at US $ 42.99 million. Some of the forward dollar rates that prevailed in the market were 1 Month - 132.22; 3 Months - 133.20 and 6 Months - 134.38.