Budget fails to boost bourse

• Market suffers Rs. 22 b loss in value; selling pressure persists over uncertainty

President Mahinda Raja-paksa’s seventh Budget may have got the thumbs up from most stakeholders, but it failed to boost the beleaguered Colombo bourse yesterday.

Despite many labelling the 2012 Budget as development-oriented, balanced or progressive, the market saw Rs. 22 billion in value lost yesterday whilst turnover was a below-average Rs. 1.1 billion.

Analysts were surprised over the market performance as there were high expectations that the 2012 Budget would give a much-needed lift to the bourse, which continues to struggle, providing a year-to-date 8.6% negative return in terms of the ASI and 25% as per the MPI.

“The Budget proposals for 2012 failed to make any significant impact on the market performance today.

Both indices closed on a negative note. However, the market turnover was lifted by a few large crossings,” NDB Stockbrokers said.

See Daily FT’s four-page 2012 Budget Special coverage from pages 14 to 17 for observations on the Budget by Arrenga Capital, NDB Stockbrokers and IIFL Securities Ceylon.

Arrenga Capital said: “The most-awaited Budget presentation carried very little to restore investor confidence,” as the market moved on a very dull tone, with the ASPI seen taking a sharp downward hill ride.

However it said that a few counters emerging with renewed investor interest after the budget announcement and Kuruwita Textiles, was one such counter as it closed with a strong gain of 4% at Rs. 26 thereby becoming the fifth biggest percentagewise gainer.

Though not mentioning the Budget, Lanka Securities said that the equity market ended lower due to widespread investor uncertainty, whilst SC Securities noted that the market ended the day on a negative note with selling seen across the board.

Investors’ scepticism over the Budget, if yesterday’s performance is a confirmation, is despite most brokers via their research reports giving an overall positive impression on most of the proposals presented by President Rajapaksa.