Stock market in welcome rebound to positive territory
Wednesday, 11 September 2013 01:42
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Oversold Bourse’s value gains by Rs. 26 b despite foreign selling n Local investor sentiment shows signs of pick up
The Colombo stock market had some cheer for beleaguered investors as an improvement in sentiments pushed the benchmark index back in to positive territory yesterday.
After having sunk to an eight-month low with the All Share Index (ASI) reporting a negative return of 0.67% on Monday, analysts said investors were likely to have seen fresh opportunities in an oversold market.
Softlogic Stockbrokers said the ASPI closed at 5,667.33 with a gain of 62 points. Gains recorded in Ceylon Tobacco (+2.0%), Sri Lanka Telecom (+5.1%) and Nestle (+2.5%) contributed to the positive performance of the index. The S&P SL20 lagged in its performance, however it ended with a gain of 19 points at 3,150.69.
The market’s value rose by Rs. 25.6 billion to Rs. 2.334 trillion whilst the ASI moved back to meagre yet positive territory of 0.4% year-to-date return.
Lanka Securities said: “The stock market regained and closed with positive returns for the first time in the month of September along with the renewed investor confidence about economic growth and the probable positive response from foreign investors who participated at the investor forum held in Hong Kong” on Monday. Over 100 fund managers attended the SEC-CSE-Bloomberg organised Invest Sri Lanka forum.
However foreign investors were net sellers yesterday to the tune of Rs. 267 million though there has been year-to-date net inflow of Rs. 18.3 billion.
NDB Stockbrokers said the market ended the day on a positive note mainly due to fresh buying seen from high net worth and institutional investors in counters such as Commercial Bank, Lion Brewery, John Keells Holdings and National Development Bank. Turnover reached Rs. 630 million in nearly two weeks while the block trades in John Keells Holdings and Ceylon Guardian Investment contributed to 36% of turnover.
The Bourse is in oversold territory, with the 14-day Relative Strength Index on Tuesday at 29.649, below its lower neutral level of 30, Thomson Reuters data showed.
“Investors might be thinking it is the right time to come back,” Reuters quoted an unnamed stockbroker as saying.
Asia Wealth said Commercial Bank garnered institutional and high net worth interest, whilst National Development Bank secured retail and institutional participation. Troubled Central Investments and Finance Company recorded the highest number of trades (317 transacting five million shares and the price closing unchanged at one rupee) for the day surrounded retail buying whilst PC House backed by retail interest emerged as the highest volume traded of around 6.9 million shares.
First Capital Equities said the general inertia that has characterised the market yesterday was likely to continue with momentum expected to remain relatively subdued in the absence of any market moving news.
“With the prospect of short-term gains well behind us, we advise investors to consequently take advantage of the current market lull by maintaining a defined investment horizon and focusing on accumulating positions in companies that will deliver quality earnings in the medium to longer term. In the meantime, if investors are still focused on speculative short-term equity gains, we believe it is may be far more prudent to sit in cash as an asset class rather than invest in anticipation of overnight gains which could lead to potential losses,” First Capital Equities added.
