Stock market investors snub ratings upgrade

The Colombo Bourse began a fresh week on a lackluster note with investors more keen on profit taking than inspired by sovereign rating upgrade for Sri Lanka.

Reuters said stock market fell to a one-week closing low in thin turnover as investors shrugged off positive news on the country’s sovereign rating and booked profits in market heavyweight John Keells Holdings.     

Lanka Securities said Colombo bourse opened for a new week on a negative territory as ASI lost 32.85 index points (-0.48%) to close at 6,744.19 whereas more sensitive MPI closed at 6,249.32, a drop of 61.80 index points (-0.98%).  The ASI closing was its lowest since 11 July.

Turnover was a lackluster Rs. 1.2 billion, lowest since 6 July and well below the last year’s average of Rs. 2.4 billion and this year’s Rs. 2.76 billion.

“The market was mostly driven by retail investors,” said NDB Stockbrokers. “Activity was relatively dull while interest on penny stocks was witnessed again. Price depreciation of John Keells Holdings weighed on indices mostly while both indices closed in red,” it added.

Diversified sector was the main contributor to the market turnover (due to Expolanka Holdings and Softlogic Holdings), while the sector index decreased by 1.33%. Expolanka Holdings was the main contributor to the market turnover while the share price increased by Rs. 0.50 (3.38%) and closed at Rs. 15.30.

Bank, Finance and Insurance sector also contributed significantly to the market turnover (due to Swarnamahal Financial Services and Central Finance). The sector index increased 0.34%. Profit taking was witnessed in Swarnamahal Financial Services after making rapid gains recently. Central Finance continued to attract investors while the share price increased by Rs. 42.60 (3.03%) and closed at Rs. 1,450.

Arrenga Capital said market moved on a volatile basis during the day with activity levels remaining below average. Indices which struggled to remain in the positive regime, gradually lost grounds to wrap up in the red.

With Expolanka Holdings having registered a 221% increase in foreign interest within first month since listing grabbed high net worth and retail participation today. The counter touched an intra-day high of Rs. 16.20 and closed for the day at Rs. 15.30 with a price gain of 3.4% contributing circa 17% of day’s turnover.

High net worth and retail interest was evident in Softlogic Holdings and Vallibel One. Meanwhile, Swarnamahal Financial Services continued with its run energised by retail participants. Central Finance saw institutional and high net worth participation registering a price gain of 3.0% during today’s trading.

East West Properties saw renewed investor participation with the counter registering a 6.5% price gain whilst emerging to be the top fourth active counter with 3.87 mn shares being traded. Distilleries Company of Sri Lanka continued to grab high net worth participation whilst Pan Asian Power saw a total of 4.5 mn shares being traded in the market.

Lanka Securities said Expo Lanka emerged as the top contributor to the market turnover (Rs.217.3mn) followed by Softlogic Holdings (Rs.181.0mn) and Swarnamahal Financial Services (Rs.117.0mn).  Above top turnover counters traded heavily during the day with more investor participation.

Foreign participation was lower and it accounted for 6% of the total market activity. At the end of the day foreign investors were net sellers with a net foreign out flow of Rs.2.6mn.

Drop in prices in index heavy John Keells Holdings (by Rs.6.30), Carsons Cumberbatch (by Rs.9.10) and Bukit Darah (by Rs.29.30) contributed adversely to the market performances.

Reuters in its report said Sri Lanka’s largest conglomerate John Keells Holdings led the fall in the overall index with a 2.71 percent loss, after gaining over 6 percent on Friday. Since 1 June, the index has shed 8.7 percent, mainly due to forced selling in line with the policy of Sri Lanka’s Securities and Exchange Commission (SEC) to recover margin debt, aiming to eliminate all credit dealing by year’s end.

The bourse is still up 1.20 percent so far this year. It was the top performer in the Asia-Pacific region in 2010 and 2009 with 96 percent and 125 percent returns, respectively.

Foreign investors were net sellers for 2.6 million rupees worth of shares on Monday and they have sold 7.14 billion rupees in 2011 after a record outflow of 26.4 billion in 2010. Traded volume was 62.1 million, the lowest since 6 July, against a five-day average of 90.1 million. The 30-day and 90-day average trading volumes were 164.4 million and 105.2 million, respectively. Last year’s daily average was 67.9 million.

The rupee ended steady at 109.49/50 a dollar as a state bank, through which the Central Bank directs the market, sold dollars at 119.50 despite heavy importer demand, dealers said.