Stock market rebounds as bargain hunters step-up buying

The Colombo stock market bounced back yesterday in a convincing fashion gaining by nearly 3% as bargain hunters stepped up buying.

The All Share Price Index gained by 2.8% and S&P SL20 Index improved by 2.6% whilst market capitalisation increased by Rs. 56 billion. This was after near 14% dip in the past two days and Rs. 151 billion in value wiped off when market opened following a seven-week shutdown owing to COVID-19 pandemic. 

Turnover amounted to Rs. 978.5 million with 42.5 million shares traded. Total foreign sales accounted for 68% of the turnover whilst Acuity Stockbrokers said non-nationals were net sellers to the tune of Rs. 329.5 million in comparison to Rs. 114 million on Tuesday. Dialog saw most foreign selling followed by Commercial Bank and Distilleries. Foreigners were bullish on Lion Brewery and Ceylon Tobacco.

First Capital said the ASPI was pushed up by the price gains in LOLC and LB Finance. The index surged to its intraday high of 4,419 within the first 30 minutes of trading and later closed at 4,367, gaining 119 points. 

Despite the market's gain yesterday the premier blue JKH's misery continued as it fell Rs. 3.70 to close at Rs. 90.40. It was trading at Rs. 134 in mid-March. However deals on JKH accounted for highest turnover of Rs. 178 million followed by Commercial Bank’s Rs. 160 million.

NDB Securities said high net worth and institutional investor participation was noted in John Keells Holdings, Commercial Bank, Lion Brewery and Ceylon Tobacco Company. Mixed interest was observed in Hatton National Bank, Dialog Axiata and Sampath Bank whilst retail interest was noted in Expolanka Holdings, Tokyo Cement Company and Browns Investments.

Analysts and brokers who maintained that market had bottomed out by Tuesday, welcomed the rebound yesterday. There is growing consensus that the CSE has exceptional value at present for long term investors. The ASPI is down near 29% year to date and the S&P SL 20 has plunged 41%.