Stock market up on continued foreign buying

Tuesday, 11 December 2012 00:16 - - {{hitsCtrl.values.hits}}

The Colombo stock market opened a new week on a positive note thanks to overall improved sentiments, largely due to persistent foreign buying.

The ASI gained by 17 points and MPI by 12 points with turnover amounting to Rs. 560 million. Foreigners bought Rs. 463 million worth of shares and sold Rs. 290 million, resulting in a net inflow of Rs. 174 million. This brought the year-to-date net inflow of Rs. 37.2 billion, an all time high.

Softlogic Stockbrokers said among the main positive contributors to the index, Ceylon Tobacco (+5.5%), Nestle (+6.0%), CDIC (+11.6%) and John Keells Holdings (+0.5%) led the list amidst wide speculation on continued foreign interest in the counters.

“Significant buying interest has been attracted by blue-chip counters primarily through crossings suggesting that institutional and foreign interest is yet to slow down despite the approach of the holiday season. However we believe this week may be the last week for the year with reasonable activity before most investors get blinded by the festive season,” the broking firm added.

A total of 10 crossings were witnessed yesterday with the largest listed telecom player Dialog Telecom topping the turnover list (Rs. 192 million) with four of the crossings. Heavy on-board and off-board interest in the counter was recorded with the announcement that the company has entered into an agreement to acquire a 26% stake in Digital Commerce Lanka Ltd., owners of Anything.lk website for a sum of US$ 1.59 m. The crossings of the counter accounted for 19.4 million shares dealt at Rs. 8 each. On-board interest in the counter was led by two large deals of 1.8 million and 2.3 million shares. The counter closed at the same price with a marginal dip of 1.2% from Friday’s closing price.

Further crossings were recorded in the dividend play counters, Ceylon Tobacco and Nestle with each counter recording two crossings. The former saw two crossings accounting for 100,000 shares crossed at Rs. 750 while the latter saw a total of 34,000 shares crossed at Rs. 1,450. Both counters saw strong onboard interest as well recording 52-week high prices of Rs. 750 and Rs. 1,460 and finally closing with gains at Rs. 749.8 (+5.5%) and 1,453.0 (+6.0%) respectively.

Investor interest continued in the popular blue-chip conglomerate John Keells Holdings. The counter also recorded two crossings amounting to 268,000 shares at Rs. 211.8. Further on-board deals 59,000 and 78,000 shares were dealt at Rs. 211.8 and Rs. 211 before the counter finally closed at Rs. 211.

According to Softlogic, investor play was witnessed in the banking and finance sector counters Commercial Bank, People’s Leasing and Finance, Pan Asia Bank and Hatton National Bank [Non-Voting].

Lanka Securities said despite high foreign and institutional participation, cash map (excluding crossings) improved to only 46% indicating a wait-and-see approach adopted by individual/domestic investors.

“With the improved activity levels in the last few days, the market RSI has now increased to 43. The ASI seems to be bouncing up from the 50% retracement level which, coupled with other technical indicators suggest a potential short term upward movement in ASI,” it added.