Net foreign buying tops Rs. 2 b in 4 days

The Colombo Bourse remained upbeat for the second consecutive day whilst foreigners were equal to the mood accounting for over Rs. 2 billion net inflow during the past four consecutive sessions.

Due to a multiplicity of reasons including SEC’s partly relaxed stance, boost of liquidity and an apparent rebound in sentiments, the Bourse yesterday gained by near 2% on top of 3% increase on Tuesday.

Whilst the locals have re-entered the market with new vigour, non-nationals remained consistent with their bullish buying.

Yesterday marked the fourth consecutive day of net foreign inflow (Rs. 593.6 million) with cumulative total amounting to Rs. 2.2 billion. Analysts welcomed this though relatively insignificant considering the year to date net foreign outflow of Rs. 25.8 billion.

“Prices continued to gain, continuing the momentum from yesterday. Retail investors seem to be enjoying the extension of the credit period. Increased purchasing of foreign investors is a positive sign,” NDB Stockbrokers said.

“Sustained buying interest dominated by local participation pushed the indices higher while foreign interest continued to account for a net inflow,” John Keells Stock Brokers said.

“Market continued on its positive trend as the ASPI gained over 100 basis points energised primarily by the local investors, on the back of the regulator extending the credit clearance period. Foreign participation was evident in heavy index John Keells Holdings which contributed nearly 14% of the day’s turnover,” Asia Securities said.

Diversified and Bank Finance & Insurance sectors were the highest contributors to the market turnover while both sector indices increased by 1.09% and 3.17% respectively. Best performing sector was Manufacturing (+4.61%) whilst the worst was Investment Trusts (-0.005 %)

The bourse saw a trading volume of 332.4 million shares on Wednesday, against the average trading volume of 81.1 million and 47.6 million in the past five and 30 days respectively. The 90-day average volume of the bourse is 71.6 million.

Turnover was 3.3 billion rupees ($29.7 million), over five times the 2009 daily average of 593.6 million rupees.

Premier conglomerate John Keells Holdings made the highest contribution to the market turnover with two crossings of 1,100,000 shares at Rs. 301. The share price increased by Rs. 0.90 (0.30%) and closed at Rs. 300. Foreign holding of the company increased by 1,222,907 shares.

Aitken Spence & Co. also contributed significantly to the market turnover with two crossings of 1,155,300 shares at Rs. 180. The share price increased by Rs. 4.90 (2.81%) and closed at Rs. 179.50. Foreign holding of the company increased by 1,219,400 shares.

Another crossing was recorded for 210,000 shares of CT Holdings at Rs. 189.

Asia Securities said lively investor participation continued in banking and finance sector counters taking sectoral contribution to 41% of the day’s turnover. Both the voting and non-voting shares of Seylan Bank topped local investors’ priority list. Among the other banking and finance sector counters that saw interest were Lanka Orix Leasing, Seylan Merchant Bank (Non-Voting), Sampath Bank, Pan Asia Bank, Nations Trust Bank and Merchant Bank of Sri Lanka. Local institutions were seen active in Aitken Spence as the counter saw 2 blocks of 0.6 mn shares each crossing at LKR180.0. Piramal Glass and Tokyo Cement (Non Voting) grabbed high net worth and retail attention during the day.

Colombo is Asia’s best performer in 2010 up 93.8% year to date though fell 13.2% since early October peak. Market capitalisation was at Rs. 1.73 trillion up 99%year to date.

The bourse is trading at a forward price-to-earnings ratio of 20 compared with all-Asia’s 13.1 and global emerging markets’ 12.1, Thomson Reuters StarMine data showed. The CSE’s 14-day relative strength index is at 53, in between lower and upper neutral limit of 30 and 70.

Meanwhile the rupee edged up to 111.20/24 a dollar from Tuesday’s 111.30/34 on stock-related inflows, currency dealers said.