After three consecutive days of uncertainty, the Colombo stock market yesterday regained strength gaining by over 1%, thanks to a late rally of strong buying.
When the market opened activity levels were very low as buyers were hunting for quantities. After being indecisive for most part of early trading, the Bourse burst off to a rally in the last one and half hour session with banking sector stocks most sought after. End result of ASPI and MPI up by 1.22% and 1.73% respectively with turnover topping the Rs. 3 billion mark.
“Prices were stagnant during early trading, but gathered speed during the day triggered by few negotiated deals in JKH, Asiri Surgical and Commercial Bank,” NDB Stock Brokers said.
John Keells Stock Brokers noted that the “indices rose sharply due to positive investor sentiment evident across the board.”
Analysts welcomed the rebound which they opined signalled a fresh rally.
The gain was despite foreigners being net sellers to the tune of Rs. 750 million as opposed to net buying on Monday.
Premier conglomerate John Keells Holdings was the highest contributor (Rs. 582 million with 1.8 million shares traded) to the market turnover with four crossings (850,000 shares at Rs. 307 each and 100,000 shares at Rs. 310 each). The price increased by Rs. 1 (0.32%) and closed at Rs. 310. Foreign holding in JKH decreased by 1.1 million shares.
The Colombo bourse is still Asia's best performer in 2010 with a 98 percent gain as the island's economy rebuilds after the end of a civil war in May 2009. It has shed 6.2 percent since hitting an all-time high of 7,207.75 on 4 October.
The CSE's 14-day relative strength index is at 57.7, between the neutral limits of 30 and 70, Thomson Reuters data showed.
It is also trading at the highest forward price-to-earnings ratio in Asia and global emerging markets at 21.8 times, compared with 13.5 and 12.6 respectively, Thomson Reuters data showed.
Other analysts said Colombo remains attractive given the unprecedented post-war growth opportunity.
The rupee closed little changed at 111.85/87 a dollar from Monday's 111.85/88, as state banks seen selling dollars at 111.85 rupees, dealers said.