Bourse booms

The Colombo stock market yesterday sent an emphatic message that it means business by setting a new high beating all time peak achieved in October last year.

A burst of bullish sentiments spurred a buying rally across the board which saw the benchmark ASPI rise by nearly 2% to close at 7,193 beating the previous highest level of 7,147.77 established on 1 October.

Market capitalisation surpassed the Rs. 2.4 trillion mark as well up from Rs. 2.35 trillion in October peak. “Diversified sector was on the up, after a long pause as institutional and high networth investors returned to the market,” NDB Stockbrokers said. However it added that stability of the existing positive momentum will depend on the behaviour of these players.

Others said that investors saw value in several under performing stocks which overall fuelled the bull run.

The fact that stock market has comfortably overtaken the October peak also nullifies some market players recent allegations that action by the regulator Securities and Exchange Commission was spoiling investor sentiment.

Credence of this view however hinges on whether the market sustains the bullish run of yesterday.

Sharp gains by top market cap and fundamentally sound companies also cemented the rally yesterday. Premier blue chip and most valuable stock JKH saw over 1 million of its shares change hands and close at Rs. 298.30, up by Rs. 5.40 whilst Sri Lanka Telecom which had been struggling for sometime finally surpassed the Rs. 50 mark to close at Rs. 53.90, up by Rs. 4.30. It touched an intra-day high of Rs. 54. Despite the rise, SLT remains the fourth most valuable stock behind JKH, Carsons and Commercial Bank but yesterday it overtook Dialog Axiata which surprisingly closed unchanged at Rs. 11.80. Environmental Resources Investments (ERI) was back in the limelight with its share price increasing by Rs. 11.10 to close at Rs. 117.60 whilst it peaked to an intra-day high of Rs. 118.90. ERI warrants too gained yesterday. ERI, SLT and JKH were among major positive contributors to yesterday’s gain. Several Carson Cumberbatch Group companies figured in the top 10 gainers percentage wise yesterday.

Laugfs Gas made the highest contribution to the market turnover of Rs. 512.8 million with 10.6 million of its shares traded including three crossings (500,000 shares at Rs. 47 and 1,000,000 shares at Rs 48). The share price increased by Rs. 8.60 (20.77%) and closed at Rs. 49.60.

Overall the Diversified and Bank, Finance & Insurance sectors were the highest contributors to the market turnover while indices increased by 2.68% and 0.09% respectively.

Reuters reported that the market rose to record high on hopes of a further cut in lending rates and better earnings in the December quarter.

Colombo remains Asia’s best performer with an 8.4 percent gain so far in 2011 after being the top performer last year with a 96 percent return.

Reuters quoted analysts as saying the Central Bank’s recent comments that banks should narrow the interest rate spread, and strong profit hopes in the December quarter, drove the market up.

Turnover of Rs. 4.7 billion was nearly two times last year’s daily average of Rs. 2.4 billion. Foreign investors were net sellers of a net Rs. 121.9 million worth shares on Thursday and they have sold a net Rs. 1.8 billion so far this year after selling a record net Rs. 26.4 billion in 2010.

The traded share volume was 142.4 million against five-day average of 195 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 17.8, highest among emerging markets, compared with 13.2 in Asian markets and 12.1 in global emerging markets, Thomson Reuters StarMine data showed. Its 14-day relative strength index is at 84.4, beyond the overbought limit of 65.4.

Meanwhile the Rupee closed down at 110.92/95 a dollar from Tuesday’s 110.85/88 on importer dollar demand, traders said.