Rs. 50 b in value lost as CSE woes continue

The Colombo stock market ended yet another day of decline as it struggles to remain positive, though turnover remains encouragingly healthy.

Since last Friday and despite the SEC’s support with relaxed credit rules, market capitalisation has dipped by Rs. 50 billion.

Arrenga Capital said the market stagnated around Wednesday’s close in the first hour of trading before starting to edge lower to the red as the benchmark index recorded the lowest level since 2 September 2010 while the MPI is lowest since 2 June 2010.

Investor sentiment remained poor and on a cautious note with Wednesday’s sharp decline in the bourse. The ASPI yesterday fell far beyond the fall in the MPI with some heavyweight illiquid counters losing ground.

The ASPI dipped by 1% but the MPI fared better with a dip of only 0.4%. Turnover was Rs. 952 million.

“We advise our investors to remain on sidelines from day trading, selling down on any speculative counters, which are expected find their fair value in the downward market.

Prudent investors would invest high dividend yielding counters with strong growth potential, which are expected to outperform the low risk bank interest rates,” Arrenga said.

Blue-chip counters which have been on the sidelines for a long time topped the turnover list yesterday, showing signs of renewed interest of long term investors.

Banking sector heavyweight, Commercial Bank, the only blue-chip to draw considerable interest in the last weeks topped the turnover list supported by two crossings accounting for two million shares at Rs. 100 contributing 21% to the day’s turnover. Another banking sector counter, Hatton National Bank, also witnessed two crossings totalling 400,000 shares at Rs. 145. The counter closed the day down 1.4% at Rs. 148.

The Diversified Sector counter John Keells Holdings was active with 238,000 shares trading in volume amidst renewed investor interest after yesterday’s selloff which left the counter trading at a 52-week low of Rs. 158.2. As a result, the counter gained 0.5% to close at Rs. 160.1 with improved volumes.

Vallibel One, a blue-chip counter trading below its book value, too dragged some investor interest as the counter saw a parcel of 1.2 million shares changing hands at Rs. 22 (-0.8%).

Dividend playing counter Ceylon Tobacco, a counter in the forefront of investor interest due to its stable dividend payout, recorded its highest-ever closing price yesterday as the counter closed at Rs. 500 (+3.1%).

Seylan Merchant Bank (-5.9%), Tokyo Cement Non-Voting, LOLC (-2.3%), Sampath Bank (-2.9%), Expo Lanka (-2.4%), Piramal Glass (-2.6%) were among the large number of counters that recorded 52-week low prices.

Interest in Environmental Resources Investments was again among the highest volume and turnover list despite activity levels sliding down compared to the last two trading days. However, the counter gained 0.6% to close at Rs. 30.8.