Bourse remains resilient, notches over 10% rise in 12 days

The Colombo stock market ended yesterday on a resilient note marking an over 10% rise in 12 days, though a degree of profit taking saw the liquid Milanka Index close marginally negative by eight points.

The 0.84% or 45 points gain in All Share Index brought its 12-day increase to 10.8% apart from reducing the year-to-date negative return to 11%-level from 20% in July.

Since the appointment of new Chairman at the Securities and Exchange Commission last Thursday, the market has risen by over 5%.

The market’s value rose by Rs. 17 billion, though lower in comparison to Tuesday. Turnover was a healthy Rs. 941 million.

Retail dominance continued to be reinforced with 18,138 trades executing 160.4 million shares bringing the total for the past seven days to 638 million, comfortably surpassing the full-July figure of 488 million shares.

“Profit taking at the start of trading resulted in the broader market remaining stagnant during early hours of trade.



However, fresh buying commenced during midday to push the ASPI up for the seventh consecutive session with interest seen across the board. The MPI was dragged down due to index heavy John Keells Holdings losing ground,” NDB Stockbrokers said.

“Retail participation continues to dominate proceedings at the Colombo Stock Exchange,” Lanka Securities said yesterday, adding, “Retail investors seem to be making maximum benefit from the current bullish sentiment in the market. Indices edged to negative territory during the morning session but recovered during the latter stages helped by improved interest on selected highly capitalised counters.”

It also said cash map improved from mid-30% levels during mid-day to end at 45.78%.

Foreign participation was 9.6% of total market turnover and foreigners were net sellers of Rs.28 million.

Asia Wealth Management said the Colombo Bourse “recorded a mixed performance with the ASI ending in the green, whilst the MPI recorded a marginal dip in the absence of significant backing from institutional investors.”

“High turnovers and volumes were recorded over the course of the day despite the absence of any crossings. This clearly highlights the increased activity of retail investors in the Colombo Bourse which had been building up from last week,” Asia added.

Softlogic Stockbrokers said buying interest across the board witnessed during the rally persisted building up investor confidence, however the volatile pace in counters which saw some profit taking led the benchmark index to plummet during mid-hours before it grasped pace to 5376.47 points (+0.92%) before closing with a gain of 0.84% for the day.

The MPI peaked at an intra-day high of 5023.87 points (+0.9%) yet plummeted amidst losses of Richard Peiris (-2.25%), Vallibel One (-1.3%) and John Keells Holdings (-0.9%). The S&P SL20 continued its momentum led primarily by activity levels heaved up in Dialog Axiata, Hatton National Bank and John Keells Holdings with the largest gains stemming from The Bukit Darah (+5.6%) upon witnessing activation followed by yesterday’s off-board transaction, Sri Lanka Telecom (+2.35%) and Aiken Spence(+2.5%).

Top contributors to turnover yesterday were Free Lanka Capital Holdings with Rs. 87.3 million, Dialog Axiata with Rs. 55.2 million and People’s Leasing with Rs. 52.2 million. Most active counters for the day were Free Lanka Capital Holdings, People’s Leasing and Tess Agro.

Notable gainers for the day were SMB Leasing non-voting up by 50.0% to close at Rs. 0.60, SMB Leasing voting up by 18.2% to close at Rs. 1.30 and People’s Leasing up by 13.7% to close at Rs. 13.30.

Banking, Finance and Insurance sector became the highest contributor to the market turnover (due to People’s Leasing) and the sector index gained 2.61%. The share price of People’s Leasing jumped Rs. 1.60 (13.68%) to close at Rs. 13.30.

Softlogic said investor focus prevailed in the banking sector players Hatton National Bank, Sampath Bank and DFCC Bank as each advanced +0.3%, +1.8% and 1.8% at their intra-day high points before closing at Rs. 145 (+0.28%), Rs. 188.60 (+0%) and  Rs. 119.70 (+0.25%) respectively.

Nations Trust Bank too gathered focus as it gained 1.4%, the highest amongst banking sector counters. Notable activity levels were observed in People’s Leasing Company with its attractive dividend yield of 7.5% at current price and recent foreign accumulation.

Diversified sector was the second highest contributor to the market turnover (due to Free Lanka Capital Holding) and the sector index shed 0.15%. The share price of Free Lanka Capital Holding closed flat at Rs. 3.

Four large on-board picks were seen leading the counter to touch an intra-day high of Rs. 13.60 (+16.2%) to close with a gain of 13.68% at Rs. 13.30. Amidst recent interest, Aitken Spence Hotel Holdings saw a block of 150,000 shares being transacted on-board at its intra-day high of Rs. 74.50. The counter closed at Rs. 74.40 (+0.27%).

With sentiment in the market remaining largely positive, DNH Financial said it expects the Bourse to gradually test the 5,500 level sooner than later driven initially by a rise in momentum stocks which we expect to have a trickle effect on fundamental stocks and the wider market.

“Even though the threat of continued high oil prices looms large, we view the current market environment as an opportunity for investors to enter quality stocks on a selective basis in order to take advantage of the market’s anticipated ascent. We continue to advise investors to focus on companies that will generate sustainable earnings, have limited energy requirements as part of their cost structures and are relatively underleveraged,” DNH added.