Bumpy ride for Bourse

The Colombo stock market began a fresh week with a bumpy ride with indices moving up and down before closing on a positive note.

The All Share Index managed to close up 0.1% or 8.7 points and MPI by 0.5% or 35 points subdued in relation to Friday’s bullish sentiments. Market capitalisation grew by only Rs. 4 billion to Rs. 2,448 billion yesterday.      

The movement of both indices throughout the day characterised the uneasy or lack of real confidence among investors.

“Heavy retail driven activity on selected counters led to sharp volatility on the index while a change of controlling stake in OGL boosted turnover,” John Keells Stock Brokers said.

Turnover was Rs. 3,561.76 million whilst foreign net outflow was Rs. 363.8 million. Best Performing Sector was Land & Property (+4.04%) whilst worst was Stores & Supplies (-4.77%)

NDB Stockbrokers said market gathered momentum during early hours of trading on the hope of relaxed credit rules and started to ease out later during the day.

Transaction of a significant stake of Orient Garments helped the turnover while stocks like Grain Elevators, Three Acre Farms and East West also remained active. Profit taking on these counters could strain the indices during the week.

Manufacturing sector was the main contributor to the market turnover (due to Grain Elevators and Orient Garments), while the sector index declined by 1.18%. Grain Elevators was the largest contributor to the market turnover. The share price remained unchanged and closed at Rs.139.50 while Orient Garment price decreased by Rs. 12.80 (36.99%) and closed at Rs. 33.90.

Diversified sector also contributed significantly to the market turnover (due to John Keells Holdings). The sector index increased 0.44%. The share price of JKH increased by Rs. 4.30 (2.25%) and closed at Rs. 197.50.

Reuters said the bourse gained on Monday to a new three-week high in high turnover and volumes, after the Securities and Exchange Commission (SEC) gave favourable comments about broker requests to relax a margin trading phase-out.

The main share index ended 0.13 percent or 8.76 points higher to 6,854.14, highest since 8 July, amid volatile trading that saw it ranging between 6,801.97 and 6,934.25.

Brokers said the fall was due to comments by the SEC, which on Friday said it had not received any proposal from brokers to ease the margin phase-out and other regulations.

However, the SEC on Monday told a local website that the brokers’ request was receiving SEC’s attention, without much elaborating.

The day’s turnover was 3.56 billion Sri Lanka rupees ($32.5 million), well above last year’s average of 2.4 billion and this year’s 2.7 billion.

Monday’s total volume was 122.5 million against the bourse’ five-day average of 125.8 million. The 30-day and 90-day average trading volumes were 89.4 million and 107.3 million, respectively. Last year’s daily average was 67.9 million.

Foreign investors were net sellers of 363.8 million rupees worth of shares on Monday. They have sold 8.61 billion rupees in 2011 after a record outflow of 26.4 billion in 2010.

The index has shed 7.22 percent since 1 June, mainly due to forced selling to meet the margin deadline.        Analysts said earning hopes also boosted, with the expectation of at least 10 percent quarter-on-quarter growth and 40 percent year-on-year in the overall June quarter earnings.

The bourse is up 3.29 percent so far this year, after being Asia’s best performer in 2009 and 2010, with 124 percent and 96 percent respectively due to optimism over the economy after the  end of a 25-year war in May 2009.

The rupee ended flat at 109.47/50 a dollar despite heavy importer demand for dollars as a state bank, through which the Central Bank directs the market, sold dollars at 109.50.