Bourse up to 13-week high on lower rates, foreign buying

The Colombo stock market rose for a seventh straight session to a 13-week high as foreign investors bought select blue chips and local retail investors turned to riskier assets after a fall in fixed-income yields.

The main share index closed 0.3%, or 17.26 points firmer, at 5,747.71, its highest close since 10 October.

A seven-session gaining streak has pushed the market into over-bought territory with the 14-day relative strength index shooting up to 77.332 on Friday, well above the upper neutral range of 70, Reuters said.

Analysts said the positive sentiment was due to easing interest rates with Treasury bill yields on Wednesday falling to nine-month lows at a weekly auction, in line with a surprise cut in interest rates last month, the Reuters reported.

Turnover was Rs. 1.23 billion. Foreign investors were net buyers of Rs. 418.43 million worth of shares after being net buyers of a record Rs. 38.63 billion worth shares last year.

Reuters also said the rupee closed slightly firmer at 127.30/40 to the dollar from Thursday’s close of 127.50/55, as exporters sold dollars, dealers said.

Meanwhile, Softlogic Stockbrokers in its report said having rallied over 200 points over the past five consecutive trading sessions, the Colombo Bourse took a well-deserved breather with the benchmark index depicting some intraday volatility swinging between marginal gains and losses.

The ASPI managed to close the week on a positive note amidst buying interest in steady lot as it advanced 17.3 points at its close of 5,747.7 points. The S&P SL20 moved along the market with a 17.5 point gain at its close of 3,121.7points with notable price appreciations in Ceylon Tobacco (+), Nestle Lanka (+), Hatton National Bank (+) and Commercial Bank (+). The turnover improved amidst large off-market deals in selected counters reading Rs. 1,234.4 million.

Heavyweight, John Keells Holdings emerged to spearhead the day’s turnover list amidst heavy institutional play. The counter witnessed seven crossings accumulating to 2.1 million shares transacted at prices Rs. 219.9, Rs. 220 and Rs. 220.5. Further, several large on-board deals were also handled in the counter as it constituted 43% of the day’s turnover.

Softlogic also said block trades continued in Hatton National Bank as it saw further four parcels totalling two million shares being crossed off at Rs. 147 and Rs. 148. Amidst heavy buying interest, the counter recorded a further 150,000 share block being taken on board as it advanced 1% at its close of Rs. 148.5, currently trading at attractive valuations at a PER of 7.7X 2013E.

Institutional interest extended in Asiri Surgical Hospital as the counter registered further 5 blocks carrying a total of 14.85 million shares crossed off at its 52-week high price of Rs. 9.5. The counter was seen trading at its 52-week high as several other large on-board trades were also witnessed, where it closed with a 2.2% gain at Rs. 9.4. In addition Chevron Lubricants, People’s Finance, Ceylon Tobacco and Lion Brewery were seen trading on their respective 52-week high prices.

Buying interest was notable in Central Finance, People’s Leasing, Distilleries, Nations Trust Bank, National Development Bank, Nestle Lanka, and Commercial Bank. On the contrary some selling pressure was visible in retail favourite stocks; Nation Lanka Finance, Environmental Resources Investment whilst active retail & high net worth play surrounded Panasian Power, Free Lanka Capital Holdings, Balangoda Plantations, Tess Agro, and Trade Finance and Investments.

“Despite some selling pressure in the speculative counters trimming the index advance, notably the momentum seemed to continue in the steady players with continued buying interest. We believe the sentiment is likely to strengthen further provided the fundamentally-backed counters remain in the limelight. Retail activity is also expected to gather further momentum with continued foreign inflows remaining a strong eye opener for the local investors,” Softlogic Stockbrokers said.