Midst bearish and challenging market conditions, Asia Wealth Management is recommending investors to pick stocks and IPOs with strong sustainable earnings.
It also said that strong earnings will muscle market momentum going forward.
Last week the Colombo Bourse moved 20.5 points down (WoW) and the MPI dipped 4.45 points down (WoW).
Asia said with the SEC extending the settlement period, many envisaged the market to recover from its “dull” momentum. However, the week ended with the market registering a marginal dip. “This also could be due to the investors currently/ expecting to lock up cash on Expo IPO, couple of expected big IPO’s and the massive rights issues of HNB and COMB, and also due to retail investors booking profits on the previous week’s gains. Albeit, this liquidity situation in the market, we witnessed healthy quarterly earnings results from the companies,” Asia said.
“This actually is an encouraging point to augment the market momentum. However, the current week was majorly muscled by retail play, mostly concentrating on the mid to low cap stocks. Going forward, we advice the investors to pick on the counters/ IPO’s with strong sustainable earnings. As long as the company earnings are supporting the market the investors should not feel ambiguous,”
Acuity Stockbrokers opined that indices reflected mixed investor sentiments at the bourse last week as it continued to be dominated by retail activities and the absence of major institutional investments.
“With regard to corporate profits, 88% of the counters that have released their quarterly earnings up to now have recorded profits with the Banking, Finance and Insurance sector recording the largest contribution of the total attributable earnings. We anticipate that the present momentum of activities will be maintained during the week ahead,” Acuity added.