2011 heralds bullish week

Asia’s best performing Colombo stock market gained by an emphatic 1.2% yesterday completing the first week of 2011 on a bullish note.

Persistent buying by locals both retail and institutions boosted the market yesterday to record over Rs. 4 billion turnover for the second consecutive day.

Strong sentiments ensured that the benchmark ASPI gained by 1.21%, its highest day gain for the week and completing an impressive 3.8% increase in the first week of the New Year. Reuters reported that the gain positioned Colombo as Asia’s best performer.

Yesterday’s closing of ASPI at 6,891.96 was the highest in three months. Last year with a 96% return, Colombo retained its position as Asia’s best performer a fete it first achieved in 2009 with a 125% gain. Colombo was also world’s second best performer for two successive years.

Analysts said the most encouraging feature was the market gaining confidence as the week progressed. Whilst it started off the first day of trading of 2011 with a mere 0.3% gain, investor sentiment gathered strength as ASPI gained by 0.6% and 0.8% each in the next three days and topping up with 1.2% rise yesterday.



The value of the Colombo bourse rose by a commanding Rs. 87 billion in the first week as market capitalisation amounted to Rs. 2.29 trillion, as opposed to Rs. 2.21 trillion close in 2010.

 NDB Stockbrokers said selected counters in manufacturing, plantations and power and energy attracted the retailers to sustain the positive streak throughout the first week of the New Year.

Yesterday Bank, Finance & Insurance and Power & Energy sectors were the highest contributors to the market turnover while both indices increased by 1.26% and 5.14% respectively.

Laugfs Gas which has been the market’s favourite this week made the highest contribution to

turnover yesterday while the share price increased by Rs 5.90 (19.22%) and closed at Rs. 37.

This is Laugfs all time high since debuting last month. Around 11.2 million of Laugfs voting shares traded in addition to 7.3 million non-voting which gained by Rs. 5.10 to close at Rs. 29.80, also its highest.

Renewed investor interest on Laugfs follows the Company making two major announcements. One was its agreement with India’s energy giant and Fortune 500 company Bharat Petroleum to launch innovative metal cutting gas in Sri Lanka under the brand name Laugfs Bharat Metal Cutting Gas. The other was its foray into mini hydro power generation with an investment of Rs. 500 million via a fully owned subsidiary.

Environmental Resources Investments (ERI) also made a return to top 10 gainers list yesterday with four of its warrants figuring in it. The increases ranged from 23.61% to 19% whilst Group company Ceylon Leather’s warrant too was among the top gainers percentage wise.

The market also saw four crossings - 1,538,900 shares of Richard Pieris at Rs. 13; 70,000 shares of Sampath Bank at Rs. 290 and 135,500 shares of Chevron Lubricants at Rs. 170 along with two crossings (100,000 shares at Rs. 360 and 70,000 shares at Rs. 361) of NDB Bank.

Reuters in its report said heavy retail buying on Friday drove Sri Lanka’s stock market higher for a sixth session and deeper into overbought territory, while the rupee ended down on importer dollar demand.

The island’s main share index <.CSE> rose 1.21 percent or 82.23 points to 6,891.96, its highest close since 5 October, and has gained 3.9 percent in the last six sessions.

It has been Asia’s best performer with 3.86 percent gain in the first week of 2011 after being the top performer last year with a 96 percent gain.

Friday’s turnover was 4.1 billion rupees ($37 million), well above the 2010 daily average of 2.4 billion rupees. Foreign investors were net sellers for the fifth session in a row with 35.3 million rupees on Friday, extending the net outflow to 1.1 billion rupees in 2011. They sold 26.4 billion rupees last year.

The traded share volume was at 304 million, against a five-day and 30-day average of 73.8 million and 57.7 million respectively. The 90-day average volume is 65 million. Last year’s daily average volume was 69.2 million.

The bourse is trading at a forward price-to-earnings (P/E) ratio of 17.7, the highest among emerging markets, compared with 13.4 in Asian markets and 12.4 in global emerging markets, Thomson Reuters StarMine data showed. Its 14-day relative strength index is at 76.8, beyond the overbought limit of 70.

Whilst Colombo’s performance was steady throughout the week other Asian markets remained mixed. NDB Stockbrokers said Asian stock markets were mixed today, with weakness in the resources sector and caution ahead of U.S. nonfarm payrolls data later in the day weighing on some markets. Nikkei was flat.

Meanwhile the Rupee closed weaker at 110.85/88 a dollar from Thursday’s two-year high of 110.82 /83, on slightly higher importer dollar demand, currency dealers said. The rupee rose 3.07 percent in 2010.

Panasian Power peaks to Rs. 4

DEBUTANT Panasian Power Ltd., yesterday peaked to a high of Rs. 4 before closing at Rs. 3.70 up by 70 cents or 23% from its IPO price.

The market saw brisk trading on Panasian Power as 63.48 million shares changed hands generating a turnover of Rs. 236.6 million. The stock was the second biggest gainer percentage wise yesterday whilst the quantity traded on debut accounted for 31.7% of the IPO offered amount of 200 million shares. Panasian Power’s issued number of shares is 500 million.

The IPO worth Rs. 600 million (200 million shares at Rs. 3 each) saw an oversubscription of seven times.