Net foreign inflow tops Rs. 30 b; Bourse rebounds

The year-to-date net foreign inflow has surpassed the Rs. 30 billion mark as the Colombo stock market bounced back yesterday on the strength of a fresh round of buying, following profit taking early in the week.

After a small outflow Rs. 31 million on Monday, the market has seen net foreign buying of nearly Rs. 300 million, bringing the year-to-date value to pip the Rs. 30 billion mark, an all-time high.

Analysts said the record inflow reiterates foreigners craving for Lankan equities, especially select blue chips. The inflow is also gigantic considering the outflows of Rs. 19 billion in 2011 and Rs. 26 billion in 2010.

On Wednesday, when net inflow was Rs. 190 million, foreign buying concentrated on JKH, Commercial Bank, Lion Brewery, Distilleries, Sampath Bank, and Lanka Hospitals, among select others.

DNH Financial said despite the last few days’ profit taking, the Sri Lanka Bourse is still the world’s best performer at 20.3% on a month-on-month basis, comparing highly favourably amongst global peers.

The Colombo Bourse produced a spirited rebound yesterday after dipping on profit taking. Colombo’s gain was despite Asian markets falling after the previous day’s impressive gains, while more weak manufacturing figures out of China added to concerns about the economic giant, DNH added.

From yesterday’s lowest level, the ASI reflected over a 100-point rise, showing strong recovery. Overall the ASI gained 53 points (0.90%) and is 100 points short of touching the 6,000 point level, the MPI gained by 69 points (1.26%) and the S&P SL20 Index moved up 28 points (0.89%). Turnover was a healthy Rs. 941 million.

Lanka Securities said top contributors to turnover were Dialog Axiata with Rs. 81.3 million, John Keells Holdings with Rs. 70.8 million and Ceylon Tobacco with Rs. 61 million. Two off-the-floor deals were recorded from Dialog Axiata (seven million shares at Rs. 7.50 each) and John Keells Holdings (100,000 shares at Rs. 219 each). Most active counters for the day were Kandy Hotels, Nation Lanka Finance and Central Finance and Investments.

“A healthy mix of investors sought selected blue chips such as Dialog Axiata, John Keells Holdings, and Ceylon Tobacco, as well as mid cap counters such as Nations Trust Bank, Sampath Bank, and Haycarb,” NDB Stockbrokers said.

Noteworthy gainers for the day were Kandy Hotels up by 32.2% to close at Rs. 11.90, SMB Leasing up by 25% to close at Rs. 0.50, and Ceylon Printers up by 19% to close at Rs. 2,998.90. Noteworthy losers for the day were newly-listed George Steuart Finance down by 18.6% to close at Rs. 1,020, Lanka Walltile down by 7% to close at Rs. 66.40, and Hayleys Export down by 6.3% to close at Rs.28.10.

“Cash map was 54.34%, indicating marginal net buying pressure prevailed,” Lanka Securities added.

Softlogic Stockbrokers said yesterday’s ASI gain was powered by Bukit Darah (+3.1%), Carsons Cumberbatch (+1.9%), Kandy Hotels Company (+28.9%), Distilleries (+3.2%), and Commercial Leasing and Finance (+4.4%). The S&P SL20 index was supported by Distilleries (+3.2%), Asian Hotels and Properties (+2.9%), and Aitken Spence Hotel Holdings (+2.6%).

DNH said it still views market conditions as a healthy entry point for investors to cherry pick quality stocks on weakness and keeping in mind an investment horizon spanning the medium to longer term.

“Although balance of payments pressures are likely to continue on the back of high oil prices, Sri Lanka’s economic story still appears to be intact and will provide the necessary comfort to investors justifying the current market PE of 16X, which appears relatively expensive compared to other frontier/emerging markets,” it added.

John Keells Stock Brokers said: “Renewed buying interest resulted in strong gains in both large caps and second tier speculative counters, which pushed the indices sharply higher.”