Stock market rebounds as week averages Rs. 5 b turnover

The Colombo stock market bounced back yesterday after suffering one of the steepest falls in recent times whilst it ended the week with an average turnover of Rs. 5 billion, reflecting higher investor activity.

The All Share Price Index gained by over 1% or 87 points and the S&PSL20 improved by 0.6%, or 18 points. Turnover improved to Rs. 4 billion, from Rs. 3.5 billion on Thursday when the ASPI and S&P declined by over 2%.

NDB Securities said during the week, the ASPI and the S&P SL20 lost 0.26% and 0.20%, respectively, whilst recording an average daily turnover of Rs. 5.11 billion. 

It said yesterday indices closed in green, as a result of price gains in counters such as LOLC Holdings, Dialog Axiata and Expolanka Holdings.

High-net-worth and institutional investor participation was noted in Melstacorp, Ambeon Holdings and Hayleys Fabric. Mixed interest was observed in LOLC Holdings, Dipped Products and Royal Ceramics, whilst retail interest was noted in Browns Investments, SMB Leasing nonvoting and Expolanka Holdings. 

The Food, Beverage and Tobacco sector was the top contributor to the market turnover (due to Melstacorp and Browns Investments), whilst the sector index gained 1.33%. The share price of Melstacorp increased by Rs. 0.60 (1.19%) to close at Rs. 51.10. The share price of Browns Investments moved up by Rs. 0.10 (1.54%) to close at Rs. 6.60.

The Transportation sector was the second-highest contributor to the market turnover (due to Expolanka Holdings), whilst the sector index increased by 2.58%. 

The share price of Expolanka Holdings gained Rs. 1.90 (2.59%) to close at Rs. 75.40. LOLC Holdings and Dipped Products were also included amongst the top turnover contributors. The share price of LOLC Holdings recorded a gain of Rs. 9 (2%) to close at Rs. 458.50. The share price of Dipped Products appreciated by Rs. 0.70 (1.29%) to close at Rs. 55.

First Capital said the market experienced a sizable bounce back following yesterday's plunge amid panic selling led by uncertainty. 

“Bargain hunters led the pack with retailers joining in towards mid-day. Index displayed a bumpy trend, reaching an intraday low of 7,977 during the first 40 minutes of trading, thereafter, exhibited a gradual uptrend for the rest of the day, followed by sideways movement over the latter part of the session, before gaining 87 points while closing at 8,099,” First Capital added. 

It said turnover was led by the Food & Beverages sector, followed by the Transportation sector, collectively accounting for a total contribution of 49%. 

Asia Securities said the ASPI followed a wave-like pattern in the first hour of trading, falling below the 8,000 level, however, rebounded strongly as the day progressed. 

It said following the panic selling that ensued yesterday on fears of rising COVID-19 cases and possible lockdowns, investors were seen buying into fundamentally strong stocks that were sold down to unwarranted levels. 

Index-heavy counters, such as EXPO and LOLC, saw strong price gains during the day, with strong buying support in these stocks helping to sustain the rally until the end of trading. The index touched a low of 7,981 (-31 points) during the day however was quick to reverse as attractive valuations presented themselves. 

“While the number of positive cases remains on the rise, media reports dismissing the likelihood of another lockdown will be viewed as a positive to company performances for the ongoing September quarter (3Q CY21),” Asia said. 

In addition, the fast-growing vaccination numbers are also a positive in bringing the pandemic under control. Overall, the index ended the week on a firm note, having recovered most of its previous session’s losses, however, compared to the previous week, ended slightly down by 21 points (-0.3%).

Asia said foreigners recorded a net inflow of Rs. 9.1 million while their participation increased to 1.5% of turnover (previous day 1.1%). Estimated net foreign buying topped in SAMP at Rs. 22.4 million and net foreign selling topped in DIAL at Rs. 10.2 million.