Buying across the board sends ASI above 5,000 points mark

A fresh burst of buying across the Board yesterday boosted the Colombo Bourse, sending the benchmark All Share Index above the psychological 5,000 points level after a two-month languish.

Brokers and analysts linked the revival yesterday to investor sentiments rebounding, a move which is likely to silence pessimists and doomsayers. The market’s value rose by Rs. 32 billion to Rs. 1.922 trillion.

“The indices climbed sharply higher on the back of renewed buying interest across the board,” John Keells Stockbrokers said. NDB Stockbrokers echoed same when it said: “The market witnessed gains across the board with the ASPI and MPI gaining 82 and 99 points respectively with continuing foreign net inflows.” DNH Financial said: “Reversing the lackadaisical trend observed during the last few days, the ASPI penetrated the psychologically important resistance level of 5,000 to close at 5,027 on the back of selective buying in a number of blue-chip counters.”



Softlogic Stockbrokers said the S&P SL20 index gained by 36 points with 19 out of the 20 counters closing in the green.

Asia Wealth Management said: “Signs of revival were witnessed in the Bourse, where the turnover levels were mainly spearheaded by fundamentally strong counters.”

SC Securities said market turnover improved to Rs. 783.2 million on the back of a few high value block trades in John Keells Holdings PLC (JKH), Chevron Lubricants Lanka PLC (LLUB) and Central Finance Company PLC (CFIN).

The top turnover generators for the day were Aitken Spence PLC (SPEN) (Rs. 133 million), JKH (Rs. 125 million), LLUB (89.4 million), CFIN (Rs. 29.5 million) and Sampath Bank PLC (SAMP) (Rs. 22.69 million). The five counters accounted for 51% of the total market turnover.

NDBS said Banking and Finance sector counters continued the bull run, with Sampath Bank, Commercial voting and nonvoting and NTB leading the list. Retail activity was also seen in Tess Agro, Browns Investments and Acme Printing.

Diversified sector emerged as the top contributor to the market turnover (due to Aitken Spence and John keels Holdings) and the sector index gained 1.68%. The share price of Aitken Spence edged up Rs. 1 (0.91%) to close at Rs. 111 while the share price of John Keells Holdings also increased by Rs. 1 (0.51%) to close at Rs. 199. Foreign holding of John Keells Holdings increased by 489,732 shares.

Reuters, which cites regulatory issues when market is down, didn’t have a clear reason for yesterday’s rebound. However, quoting unnamed analysts, Reuters repeated something it has said of late: “The resignation of the Head of the Securities and Exchange Commission, Tilak Karunaratne, still weighed on sentiment.”

Nevertheless, Reuters noted foreign investors were net buyers for a 23rd straight day as financials led the field.

“Foreign investors bought a net Rs. 192.5 million ($ 1.46 million) worth of shares, extending the net foreign inflow this year to Rs. 28.26 billion. They have bought a net 4.74 billion rupees worth of stocks in the last 23 sessions,” Reuters said.

It quoted Bartleet Religare Securities as saying there were many traders waiting to unload once the market hits around 5,500. “Until then, I see this market building momentum,” Reuters quoted a broker as saying.

Lanka Securities said most counters saw bullish activity as the recent positive trend seems to be having a lasting effect. “However, the worrying factor would be the rising rate of interest,” it added.

DNH in its market report said contrary to the rhetoric of some that investing in the Colombo Bourse can largely be akin to a game of blindfold darts, it takes a markedly different view.

“Ours is based on the belief that the market will deliver measurable positive results provided that the right investment strategy is employed over a reasonable investment horizon,” DNH said.

While the equity market has a notorious tendency to rush from one side to another in response to the ebb and flow of optimism or pessimism, DNH recommends investors to now make a directional call, build a quality portfolio and take advantage of what is increasingly becoming a ‘stock pickers’ market.

“Consequently, we advise investing in high quality cash-rich companies with strong balance sheets that have underperformed during periods of market over-exuberance and which have the upside potential to re-rate to their intrinsic values,” DNH Financial said.