Stock market rebounds but not out of the woods yet

The Colombo stock market closed in the green regaining Rs. 65 billion of lost value yesterday but the rebound was not strong enough to push the year to date ASPI to a gain, signalling CSE is still not out of the woods yet.

The All Share Price Index gained by 1% or over 125 points and the S&P SL20 improved by 1.6% or 65 points. ASPI’s year to date return still reflected a negative 0.15% after having lost over 4% since last week. S&P SL20 reduced its YTD negative return to 2.8% from 4.27% on Wednesday. 

CSE also regained Rs. 65 billion of the Rs. 272 billion lost since last week.

Investor sentiment appeared beleaguered judging by a four-month low turnover of Rs. 3.5 billion involving 130.6 million shares.

Proof of bargain hunters returning on value and improved outlook depends on CSE closing stronger today. 

Asia Securities said following three consecutive sessions of price declines, the indices returned to green territory as heavyweight counters LOLC, EXPO, RCL, BIL and VONE regaining some ground after dropping sharply lower in the past few sessions while momentum-driven AAIC recorded a deep decline of 7.5% in an otherwise positive session. 

Retail and HNI activity remained moderate during the day with turnover being its lowest level in the last four months (excluding the short trading session on 24 December 2021). 

“Market witnessed sizable volatility in early trade as the ASPI, following a gap-up of 78 points, dipped below the 12,000 level to an intra-day low of 11,932 (-150 points) in the first hour of the session. The index subsequently gained 246 points to reach 12,178, however witnessed another 127-point pullback to 12,051 in mid-afternoon trade. 

“Thereupon, the index regained momentum on improved retail and HNI activity in heavyweight stocks across sectors and gradually reached an intra-day high of 12,313 (+231 points),” Asia said. The ASPI again declined in the last hour of the session, however ended on a positive note with a gain of one percent (+126 points) boosted by LOLC (+5.2%), EXPO (+2.9), RCL (+2.6%), BIL (+2.1%), VONE (+2.4%) and SUN (+10.2%). The breadth of the market turned positive with 117 price gainers and 93 decliners.

Asia also said foreigners recorded a net inflow of Rs. 5 million  while their participation declined marginally to 2.0% of turnover (previous day 2.6%). Net foreign buying topped in MGT at Rs. 21.4 million and selling topped in VFIN at Rs. 26.5 million. 

First Capital said the bourse moved into the green zone breaking the continuous downfall trend despite recording low turnover as investors started bargain hunting following the price decline during the past few days. 

“In the beginning, the index displayed major volatility swaying in and out from green to red. During the mid-day, the market recouped earlier losses and took an upbeat note while closing the session at 12,207, gaining 126 points. In contrast to yesterday, LOLC and EXPO counters were the major contributors to move the index up,” First Capital said adding turnover was led by a joint contribution of 45% from the Capital Goods and Food, Beverage and Tobacco sectors. 

NDB Securities said high net worth and institutional investor participation was noted in LOLC Holdings, Sunshine Holdings and ACL Cables. Mixed interest was observed in Expolanka Holdings, Vallibel One and Softlogic Life Insurance whilst retail interest was noted in SMB Leasing nonvoting, Browns Investments and Renuka Agri Foods. 

Capital Goods sector was the top contributor to the market turnover (due to Vallibel One) whilst the sector index gained 1.24%. The share price of Vallibel One moved up by Rs. 1.80 to close at Rs. 77.60. Food, Beverage & Tobacco sector was the second highest contributor to the market turnover (due to Browns Investments) whilst the sector index increased by 1.27%. The share price of Browns Investments gained 30 cents to close at Rs. 14.30.

Expolanka Holdings, Softlogic Life Insurance and LOLC Holdings were also included amongst the top turnover contributors. The share price of Expolanka Holdings increased by Rs. 9 to close at Rs. 318. The share price of Softlogic Life Insurance recorded a loss of Rs. 12.25 to close at Rs. 150.50. The share price of LOLC Holdings appreciated by Rs. 54.50 to close at Rs. 1,099.25.

Separately Vallibel Power Erathna announced an interim dividend of 35 cents per share.