Market fundamentals still neglected says Asia Wealth

Monday, 12 December 2011 00:00 -     - {{hitsCtrl.values.hits}}

Asia Wealth Mana-gement last week attributed Colombo stock market’s performance last week to investors’ ignorance over fundamentals.

The bourse closed on a negative note with the ASPI losing 91.42 points or 1.50% and the MPI losing 15.46 points or 0.29%. The ASPI closed at 5996.44 and the MPI closed at 5231.12 points.

In its review of the Colombo Bourse last week, Asia said despite volatilities witnessed during trading, both indices closed relatively flat with a week on week (WoW) variance being negligible. ASI shed heavily, but regained nearing its support level of 6000 points.

“We further observed that heavy trading took place on fundamentally sound counters proving that institutions were not inactive but silently adapting a strategy of accumulating fundamentally sound stocks at prevailing discounted prices, until the market settles back and move to a positive territory. And also on the other hand we observed that retail investors are struggling with their investments made on speculative counters,” Asia Wealth said.

“We still see the market reacting towards factors that doesn’t hold a correlation to market performance, the talk over changing senior positions in the SEC is a fine example to this. Therefore, we believe that time is ripe for investors to deviate from the current mentality and focus on fundamentally strong counters with a strong backing by performance,” Asia Wealth added.

Acuity Stockbrokers said market hovered around the critical technical support level over the week, rising marginally over 6000 mid- week, but closing the week below.

Despite thin volumes overall, significant interest in blue-chip counters propped market activity during the week, it added.

The Central Bank on Tuesday raised the ceiling on foreign investments in government securities as it acknowledged the lower liquidity levels in money markets and the subsequent impact on short-term interest rates.  “Markets however, are likely to remain subdued through month-end with the onset of the holiday season,” Acuity added.