Selling pressure by locals bring Bourse down

Selling pressure figured as a key reason for the Colombo stock market to close negative yesterday, according to Softlogic Stockbrokers.

It said the benchmark index trended downwards (dip of 30 points) on a rather dull market where activity seems to be drying up due to the upcoming New Year holidays in mid-April.  Yesterday’s dip brought the year to date gain of ASI to 1.1% whilst the S&P SL 20 Index has performed well with a positive return of 6.4%.

Lanka Securities said indices dropped led by retail heavy counters. “A sense of profit taking and cautious investing by retailers determined sentiment. With this slight downturn we should expect plenty of bargains ahead,” it said adding Nestle gathered steam with investors expecting a final dividend.

 NDB Stockbrokers said the market commenced the week on a negative note amidst subdued participation from high net worth, institutional and foreign investors.

“Banking sector contributed to 69% of the day’s turnover mainly owing to the interest in Sampath Bank, National Development Bank and Hatton National Bank,” NDBS added.

Softlogic said one crossing in Sampath Bank managed to boost turnover to Rs. 403 million and contributing 28% to turnover.





 The dip in value in Hatton National Bank, Sri Lanka Telecom, Commercial Leasing and Commercial Bank weighted negatively on the index.

Sampath Bank led the turnover with the sole crossing for the day of 500k share dealt at Rs. 224. On-board trading remained strong with 161,000 shares trading as the counter finally closed at Rs. 225.6 (+0.3%).

Interest in National Development Bank persisted with the counter renewing its 52-week high price of Rs. 168.5. Following the XD date heavy selling pressure was observed in Hatton National Bank [Voting] and its [Non-Voting] where both counters dipped 4.2% and 6.1% to close at Rs. 160.2 and 123.8 respectively.

Softlogic also said interest in big caps continued yesterday as investor interest was noted in John Keells Holdings and its subsidiary Asian Hotels and Properties though on a smaller scale in relation to previous days.

The former dipped in value to close at Rs. 246.5 (-0.2%). The latter, however recorded a few mid-sized blocks onboard at a similar price of Rs. 70 while the counter closed flat for the day.

The dull retail segment saw some activity with selected retail favorite counters led by Janashakthi Insurance, Free Lanka Capital Holdings, Colombo Land generating some investor attention.

Foreigners remained bullish with a net inflow of Rs. 60 million, bringing the year to date figure to Rs. 4.8 billion.

DNH Financial said with 1Q2013 having come to an end, it expects the market to trade range bound until the corporate results season kicks in during the next several weeks where a break to the upside.  

“In order to benefit fully however, we believe that it is important for investors to focus on companies that have high but sustainable top line growth with less sales volatility. We further accentuate the need to select those companies with significant free cashflow generation and are relatively underleveraged even despite our expectation of a decline in interest rates,” DNH said.

“With regard to sector exposure, we continue to re-iterate the need to focus on stocks that will benefit from robust domestic consumption cycle and who will be able to sustain earnings growth due their dominant market share, pricing power and economies of scale. Consequently, we favour high growth counters in the food and beverage, hotels, diversified and banking (selectively) sectors while portfolio investment into the industrial sector should be made on a selective basis,” DNH added.