Bourse gathers strength as ASI tops 6,700 mark

Wednesday, 16 July 2014 00:01 - - {{hitsCtrl.values.hits}}

The Colombo stock market gathered further strength yesterday with improved local investor sentiment pushing the benchmark All Share Index to cross the 6,700-points mark. A gain of near 29 points yesterday pushed ASI to 6,727 points bringing the year to date return to 13.78%. A similar increase in S&P SL20 index saw its year to date return to 15%. Market capitalisation was Rs. 2.82 trillion, up by 14.62%. “Indices extended gains from Monday with the benchmark ASPI crossing the 6,700 mark after a period of more than two and a half years,” NDB Stockbrokers said. Lanka Securities said price progression in index heavy counters such as Carson Cumberbatch (closed at Rs. 450.00, +7.1%), Bukit Darah (closed at Rs. 680.00, +5.4%) and John Keells Holdings (closed at Rs. 243.40, +1.3%) affected positively to the index performance. Turnover crossed the Rs. 2 billion as market saw several crossings in Distilleries (4 million shares at Rs. 204.00 per share), Aitken Spence Hotels (2.7 million shares at Rs. 80.50-81.50), Commercial Bank (0.5 million shares at Rs. 145.00 per share), John Keells Holdings (0.2 million shares at Rs. 242.00 per share), Access Engineering (1.8 million shares at Rs. 26.00 per share) and Hatton National Bank (0.2 million shares at Rs. 169.50 per share). Aggregate value of crossings represented 56% of the total market turnover. Distilleries emerged as the top contributor to the market turnover with Rs. 834 million followed by Aitken Spence Hotels (Rs. 306 million) and John Keells Holdings (Rs. 137 million). “Gainers surpassed losers 131 to 84, while 53 counters remained unchanged. Cash map marginally declined to 49% from 51%,” Lanka Securities added. Foreign buying on Distilleries amounted 1.5 million shares worth Rs. 307.5 million but there was also outflow with Aitken Spence seeing foreign selling of 3.4 million shares worth Rs. 283 million. Overall net foreign inflow was Rs. 48.6 million bringing the year to date figure to Rs. 9.46 billion. HNB and Chevron saw net foreign buying. Retail interest was seen in PC Pharma, PCH Holdings, Sierra Cables and SMB leasing Analysts said low interest rate scenario and improved external trade boosted overall investor sentiments. The Central Bank kept policy rates steady at multi-year lows for a sixth straight month, as expected, despite private sector credit growth slowing to a 4-1/2-year low. Reuters however said the index was in overbought region since 3 July as it has gained 5.47% so far this month. “There can be profit-taking here and there, but the market will continue to gain with low interest rates and continued foreign buying. Investors are awaiting to see how the foreigners are reacting (in an overbought situation),” said a stockbroker asking not to be named. Reuters said lower interest rates have prompted local investors to buy shares and shift their savings from unattractive fixed assets, analysts said, as yields on treasury bills edged down further at a weekly auction on Wednesday. Analysts said foreigners have been buying risky assets because they see value in them, while falling yields in fixed assets gradually prompt local investors to shift to equities. The market has been on a rising trend since late February due to continued foreign buying and lower interest rates.

Rupee rises to over 1-year high; CB intervenes to cap gains

Reuters: The rupee climbed to its highest in more than a year on Tuesday as inflows from remittances and exporter dollar sales outpaced dollar demand from importers. State banks also lowered the dollar buying rate by two cents to curb a sharp appreciation in the local currency. The rupee ended at 130.18/20 per dollar, its highest close since 28 June 2013 and firmer than Monday’s close of 130.20/22. The Central Bank is buying from the market to curb excess volatility as there have been continuous inflows during the last few weeks, an official from the Bank’s international operations department told Reuters. “If we had not intervened, the rupee would have ended at 125 (levels),” the Central Bank official said. “It’s the market sentiment... the market sentiment as you are aware is drifting down. So that is also reflected in our accumulation from the market.” The Central Bank had absorbed $ 750 million from the domestic foreign exchange market by 14 July, the official said. Dealers said the two State banks, through which the Central Bank directs the market, bought dollars at 130.18 per dollar, two cents below Monday’s rate. The Central Bank kept policy rates steady at multi-year lows for a sixth straight month on Monday, as expected, despite private sector credit growth slowing to a 4-1/2-year low. The fuel import bill, which accounts for about 20% of monthly imports, is also on the decline as the country has been shifting to alternative power sources such as coal and hydro power, the dealers said. The cost of fuel imports fell 35.4% in May to $ 208.9 million, compared with the same month a year earlier. Sri Lanka’s trade deficit narrowed by 47.9% to $ 393.4 million in May from $ 754.9 million a year earlier, mainly due to lower imports, Central Bank data showed on Monday.