Milanka Index turns positive after 17 months

After a 17-month negative run, the active Milanka Index yesterday turned positive making a nostalgic day for investors as the rebound in the Colombo Bourse gathered further momentum.

MPI was last positive on 1 March 2011 with a 0.50% gain but was negative since. It finished 2011 with 26% dip whilst by mid-June this year the negative return was 20%.

The overall rebound in the market also saw the All Share Index reduce its year to date negative return to below 8% yesterday after its peak of 22% negative return in mid-June. Last year it closed 8.5% down.



NDB Stockbrokers headlined its report as “MPI catching up on ASPI” and said the difference between ASPI and MPI reduced to the lowest levels seen since January as the market continued to generate heavy retail interest.

“The Bull Run continued for the tenth consecutive day with bourse extending further gains,” it added.

Accumulation was witnessed in banking sector counters such as Sampath and Commercial Bank whilst heavy interest continued in John Keells Holdings. Retail favorite counters HVA Foods, Panasian Power, Colombo Land and Development and Lanka Hospitals continued to dominate the market activity.

Banking, Finance and Insurance sector emerged as the top contributor to the market turnover (due to Sampath Bank and Pan Asia Banking Corporation) and the sector index gained 1.33%. The share price of Sampath Bank surged by Rs. 10.20 (5.21%) to close at Rs. 205.80 while the share price of Pan Asia Bank edged up Rs. 0.50 (2.50%) to close at Rs. 20.50.

Diversified sector became the second highest contributor to the market turnover (due to John Keells Holdings) and the sector index gained 2.12%. The share price of John Keells Holdings increased by Rs. 4.50 (2.25%) to close at Rs. 204.50. Beverage Food and Tobacco sector also contributed heavily to the market turnover (due to HVA Foods) and the sector index gained 1.54%. HVA Foods became the single biggest contributor to the turnover with the counter gaining Rs 3.80 (26.95%) to close at Rs. 17.90.

Further, Colombo Land and Development was seen among the top contributors to the market turnover. The share price increased by Rs. 4.50 (11.75%) to close at Rs. 42.80.

Asia Wealth Management said: The Colombo bourse witnessed retail and high net worth investors actively getting involved in today’s trading, across the board, while gainers for the day exceeding losers. Profit taking was not strongly witnessed during the day, while buying side continued to strengthen.”

Lanka Securities said the Colombo stock market opened for the week in green with all indices gaining ground. The Benchmark All Share Index closed near one of major resistance level of 5,600 points. Retail investors dominated the market activities where they seem to be making maximum benefit from the prevailing bullish sentiment in the market. Investor interest was seen throughout the day as most of the penny stocks were trading above their previous closing prices.

Overall ASI gained 95.18 points (1.73%) to close at 5,592.03. MPI gained 155.48 points (1.89%) to close at 5,248.84 and the S&P index gained 42.69 points (1.43%) to close at 3,026.50. Turnover was Rs. 1.9 billion.

Top contributors to turnover were HVA Foods with Rs. 126.0 million, Environmental Resources Investments with Rs.73 million and John Keells Holdings with Rs.70 million. Most active counters for the day were HVA Foods (up 27%), Citrus Kalipinya (up 16%) and PC House (up 6%)

Notable gainers for the day were Ceylon Printers up by 50.0% to close at Rs. 3, 270.00, Tea Smallholders up by 31.0% to close at Rs.63.00 and HVA Foods up by 27.0% to close at Rs. 17.90. Notable losers for the day were illiquid Good Hope (down by 16% to close at Rs. 1,300) and E. B Creasy (down by 8.0% to close at Rs. 1000). Further Janashakthi Insurance was at third place in losers list as today is the Ex-dividend date (down by 6.3% to close at Rs. 12).

Cash map for today was 57.96%. Foreign participation was 7.8% of total market turnover and foreigners were net buyers of Rs. 38.7 million.

Softlogic Stockbrokers said yesterday’s investor orbit was around the retail speculative darlings and blue chip heavy weights.

“Selected speculative stocks on the market advanced at a higher rate than any other group of stocks, far outpacing their high-quality peers,” it added.

The Milanka Index, holding a higher comprise of the small-mid caps, speeded over a 150 point gain after seven months to close 5,248.84 points. The ASPI by no means was held back as it was also seen spiking up 95.18 points at its close of 5,592.03 points to concrete above the 5,500 threshold taking broad steps towards the 6,000 point breach. S&P SL20 index gained 42.7 points as it closed above 3,000 points today. Volume too remained steady with turnover clocking Rs. 1.9 billion. September trading led the market capitalisation to grow 8% to Rs. 2,138.3 billion whilst YTD performance slip has been mitigated to -7.8% from a worst of -22.0% in June 2012. Five shares gained for every one that lost today. Sound investment focusing on steady portfolios remained undisturbed from the speculative noise assuring an across the board grip on the market’s bull run.

The day’s crossing board moved in line the overall tune of the bourse as a 1.9 million share crossing was struck on Environmental Resources Investment at Rs. 16. HVA Foods was the day’s frontrunner. Price appreciation of HVA Foods remained unscathed from its morning sprint to balloon as much as Rs. 18 before closing with a hefty gain of Rs. 17.7 (+25.5%). Pan Asia Bank grabbed renewed play after three on-board deals counting 1.8 million shares was seen dealt at prices Rs. 20 and Rs. 20.1. Coco Lanka and Renuka Agri Foods, one of the very few exposed to benefit of the dollar devaluation, saw active renewed play as  the price escalated 6.6% and 3.9% at their conclusion of Rs. 59.7 and Rs. 5.3 respectively. A 249,400 share quantity of Ceylon Theatres was seen traded in the market at Rs. 130.0.

Retail investors’ burst of energy continued without any interruption with the price gainers’ slot being taken up by the penny stocks. Following made up retailers’ close watch list; Ceylinco Seylan Developments [+9.2%],  The Colombo Fort Land and Building [+9.6%], Colombo Land and Developments [+9.1%], Lanka Hospital Corporation [+7.6%], Panasian Power [+10.0%], Radiant Gems [+15.1%], Citrus Leisure (Normal & W : 0019) [+2.6%, +4.5%], Freelanka Capital Holdings [+10.3%], Chilaw Finance [+20.9%], Union Bank [+9.6%], Touchwood Investments [+11.6%], Ceylon Grain Elevators [+12.7%], Three Acre Farms [+12.9%], Bairaha Farms [+12.4%] and  E Channelling [+1.7%].

The day’s attention favouring the finance sector chorused our Friday’s Weekly Issue’s comment in rating the banking stocks as still undervalued. Sampath Bank, National Development Bank, Commercial Bank and Hatton National Bank (Voting and Non-Voting) grabbed the prime banking interest play list whilst Vallibel One, Singer Finance and Asian Alliance also some active play.

Kalpitiya Resorts saw some sizeable quantities being exchanged on board as it rocketed 16.4% at the close of Rs. 7.1. PC House, though ridden by retailers, also saw similar play. Colonial Motors joined in the United Motors for the motor sector gains as each gained 20.1% and 6.1% at their close respectively. Dialog Axiata encountered some considerable trades during the day as six on-board trades added 1.1 million shares to the counter’s volume for the day.



Box

DNH’s call on the market

From a purely PE valuation point of view, the Sri Lanka bourse is neither expensive nor cheap, noted DNH Financial.

It said the bourse appears cheap considering its historical PE levels, but somewhat expensive relative to other frontier/emerging markets.

“However, on an all important Price to Growth (PEG) basis, the market remains attractive both on historical as well as peer comparison. Consequently, we advise investors to be appropriately positioned to maximise their returns at an acceptable level of risk to generate healthy returns during this market rallying stage,” DNH added.