Bourse starts yet another week on negative note

The Colombo stock market reaffirmed its continuous struggle by beginning yet another week on a negative note.

The benchmark ASI and the Milanka Index dipped by over 1%. The ASI’s year-to-date return dropped back to below 10%, whilst the MPI’s negative return was closing upon 5%. In mid-February the ASPI had offered a 17.7% return. Yesterday’s percentage drop was the largest since March 15 and ASPI level was the lowest since April 1st.  However the redeemer is that Colombo still remains Asia’s best performer.

Turnover yesterday rose to a high Rs. 5.7 billion largely on account of internal transfers involving Carson Group companies.

“The indices took a further dip on sustained retail selling pressure while activity levels were dominated by trades on INDO, SELI and SHAL driven by its group restructuring,” John Keells Stock Brokers said.

NDB Stockbrokers said indices closed red amid low trade volumes while the turnover received a boost from oil palm sector transactions. “The new direction issued on the limits of margin trading would also have contributed to the lacklustre performance,” it added.

Despite the earnings season, Bartleet Mallory Stockbrokers said the market saw a major slump. “Lack of liquidity in the market triggered by investors pulling investments for upcoming IPOs and brokers clearing debt to meet SEC regulations are the main reasons for the downfall, in our view,” it added.

“Overall activity levels continued to diminish as investors still seem to remain in ‘hibernation’ form,” opined Asia Wealth.

The oil palm sector was the main contributor to the market turnover with deals on Carson Group firms accounting for Rs. 4.7 billion of the turnover. Deals on Indo Malay (Rs. 2.4 billion), Selinsing (Rs. 1.15 billion), Good Hope (Rs. 692 million) and Shalimar (Rs. 447 million) figured. They also boosted net foreign inflow to Rs. 2.4 billion.

Indo Malay saw four blocks totalling to 1.7 million shares changing hands at Rs. 1,421.0, with Good Hope seeing four crossings totaling to 583,600 shares at Rs. 1,186 whilst Shalimar also encountered similar blocks wholly counting to 502,900 shares at Rs. 887.0.

The best performing sector yesterday was Footwear & Textiles (+0.38%) whilst the worst was Investment Trusts (-2.93%).

Volume of shares traded was 37.7 million lower against the 12-months average daily volume of 92.5 million. Price losers (175) outperformed price gainers (45), pushing the market down.

Asia Wealth said institutional and high net worth participation continued in Commercial Bank as well as in Brown & Co. Retailers and high net worth investors were seen quite active in Central Finance. A block carrying 342,300 shares of Aitken Spence Hotel Holdings was seen changing hands at Rs. 92.0.

The Bank, Finance & Insurance sector also contributed to the market turnover (sector index decreasing 1.23%).

Nuwara Eliya Hotels announced an interim dividend of Rs. 5 per share. Trans Asia Hotels also declared a first and final dividend of Rs. 3 per share.

Reuters quoting unnamed analysts said inflation, which hit a 27-month high on annual basis in April, has been weighing on investor sentiment as shrinking consumer spending may knock the revenue and earnings of consumer-related shares.

The rupee meanwhile gained to 109.65/75 a dollar from Friday’s close of 109.90/92 as exporters and banks sold dollars on hopes of further appreciation of the local currency, which the central bank has already acknowledged.

Traders and dealers said the central bank with effect from Tuesday relaxed the net opening position of dollars for commercial banks depending on the strength of their balance sheet, which also prompted high dollar sales, Reuters added.