Stock market opens fresh week positively

The Colombo stock market began a fresh week positively taking strength from the pre-Independence Day rally witnessed on Thursday.

ASPI was up 34 points (+0.47%) and MPI by 31 points (+0.44%) whilst turnover was healthy at Rs. 4.3 billion.

“Sustained local retail buying pushed the indices higher while turnover was dominated by trades on diversified, banking and manufacturing sector counters,” John Keells Stock Brokers said.

Best performing sector was Plantations (+3.66%) whilst the worst performer was Information Technology (-7.34%) despite PC House announcing good nine month results.

Reuters in its report said stock market hit a new all-time closing high on Monday on heavy retail buying, while foreign investors bought in thin volumes after the IMF approved the island nation’s loan tranche last week.

Colombo has been Asia’s best performer with an 11.2 percent gain in 2011 after being the top performer last year with a 96 percent return. Recent retail buying has pushed it deeper into the overbought region with the 14-day relative strength index at 81.

Reuters quoted analysts as saying the bourse will gain further on low interest rates and low property prices, though the recent strong gain in some stocks was not fundamentally warranted. The market widely expects the Central Bank to keep monetary policy rates unchanged on Tuesday.

Foreign investors bought a net Rs. 18.3 million worth shares on Monday after the IMF comments on Friday, but they have sold a net Rs. 3 billion so far in 2011, after selling a record net Rs. 26.4 billion in 2010.

Traded share volume was 122.9 million, against a five-day average of 110.91 million. The 30-day and 90-day average trading volumes were 92.9 million and 71.4 million respectively. Last year’s daily average volume was 69.2 million.

The bourse is trading at a forward price-to-earnings (P/E) ratio of 17.3, one of the highest among emerging markets, compared with 13 in Asian markets and 11.9 in global emerging markets, Thomson Reuters StarMine data showed.

The rupee closed steady at 110.98/111.00 a dollar as a state bank sold dollars at a flat 111.00 rupees, the upper limit of the Central Bank’s dollar trading range amid heavy importer demand, dealers said.

It’s unlucky 7 for Madulsima

For Madulsima Plantations seven is unlucky as it came under the SEC’s 10% price band yesterday.

From today until 3 March Madulsima shares will be subject to 10% high or low price limit making it the seventh in the current list though it is the 10th to be captured by SEC since the start of 2011.

The Company’s share price yesterday rose by Rs. 6.20 or 21.7% to close at Rs. 34.70 after peaking to a high of Rs. 35. It was the third highest gainer percentagewise yesterday.

Last week it closed up Rs. 7.40 to Rs. 28.50 whilst the previous week it closed at Rs. 18.20. Since the week ended 21 January Madulsima has been establishing new high prices after breaking the Rs. 21-level 52-week highest.  

Yesterday’s peak of Rs. 34 is its all time high. Between the week ended 21 January and yesterday Madulsima’s share price had appreciated by Rs.16.50 or 90%. Madulsima is not the only plantation stock to be caught under the SEC’s price band formula. In tandem with investors re-rating of plantation stocks and their recent rally, Horana and Elpitiya came under the band in the last week of January. Apart from those two and Madulsima, the other current securities under the price band at present are MTG Walkers (Kapila Heavy), C.W. Mackie, Alufab and Lanka Aluminium.

Interest rates are at ‘comfortable level’ – CB Chief

SRI LANKAN interest rates are now at a “comfortable level,” the country’s Central Bank Governor Nivard Cabraal said Monday, a day before the Central Bank meets to set monetary policy.

Cabraal told Dow Jones Newswires that a future loosening in policy couldn’t be ruled out, while a tightening was “very, very unlikely” anytime soon. He also said Sri Lanka’s economy has been able to cope with the rupee’s rise over the past year, adding that the authorities would continue to ensure currency moves were orderly.

See also page 9