Focus on fundamentals key to sustainable rally says DNH

Wednesday, 17 August 2011 01:17 - - {{hitsCtrl.values.hits}}

DNH Financial whilst welcoming the SEC move said it looks forward to investors focusing more significantly on corporate fundamentals, as it was key for a sustainable rally.

“While the SEC’s announcement today giving the green light to stock broking companies to provide margin facilities to clients using their net liquid asset is encouraging, we expect investors to now focus more significantly on corporate fundamentals which could provide the necessary catalyst for a sustainable rally leading to the market re-rating comfortably above the 7500 levels,” DNH Financial said.

“It is important to accentuate however, that from an absolute PE valuation yardstick, the market at current level may appear relatively expensive vis-à-vis regional markets, but from an all important PEG basis, the Colombo bourse can be described as not only attractive but cheap and getting cheaper as the full impact of the current earnings cycle is reflected,” the broking firm added.

DNH also said in line with its expectations, the Colombo bourse broke through the 7000 key resistance level yesterday as risk appetite for equities continued to return boosting investor confidence and sentiment. Global markets meanwhile traded range-bound higher following their roller coaster ride last week, it added.