Return of retailers revs up Bourse

Perhaps in anticipation of better times ahead, retailers with improved sentiments returned to the CSE in large numbers yesterday, as the Bourse saw its value rise by Rs. 23 billion with over 10,000 trades done as opposed to July-month’s daily average of 4,000 plus.

Most brokers and analysts said retailers made a strong comeback yesterday dwarfing some sceptics’ reservations over liquidity issues and negative sentiments.

Some linked the return of retailers to a perceived strong rally in tandem with the impending new appointment of a more pragmatic chairman by Finance Minister to head the Securities and Exchange Commission (SEC).

The benchmark ASI gained 60 points or 1.20% to close at 50,773.10 points, the highest level since 20 June. The MPI gained 87 points or 1.89%, helping the more active index to move back to below the 10% negative return threshold.

Turnover was Rs. 454.3 million, less than a third of this year’s daily average of Rs. 854.6 million, reflecting a full rebound in sentiments yet to come.  However, the level of activity 33.4 million shares transacted via 10,484 trades lifted stakeholder sentiments. On Friday only nine million shares were done via 3,829 trades whilst the July average of daily trades was around 4,856 and in June it was 7,472 trades.

“Retail activity was at the forefront with only one private deal taking place. Retail interest was seen throughout the day as most retail active counters were trading above their previous closing prices,” Lanka Securities said, confirming overall market view. “The Bourse started the week on a positive note with both indices gaining on the back of heavy retail investor activity,” said NDB Stockbrokers.

Softlogic Stockbrokers concurred, saying: “Indices surged once again with strong positive momentum building up among investors. Activity levels have gradually improved with a lot more retail participation being witnessed. Four shares gained for every one share declined, signalling the higher investor confidence in the market.”

Asia Wealth Management opined: “The activities in the Bourse saw a boost, with gainers exceeding losers, primarily due to speculation over the appointment of a new regulator.”

The market saw a mixture of blue chips and speculative counters dominating trading yesterday. However, top blue chips fuelled the ASI’s gain led by JKH (up by Rs. 1.6% or Rs. 3.10 with a 4.89% contribution), Asian Hotels (4.40%), CDIC (4.27%), Carsons (3.29%) and Asha Central (3.20%). Overall 69% or 170 stocks of those traded gained, with only 43 reporting a dip in prices.

Top contributors to turnover were Central Finance with Rs. 36.6 million, JKH (Rs. 31 million), Colombo Land (Rs. 23 million) and Commercial Bank (Rs. 21.8 million). Volume wise, most active counters for the day were Hydro Power Free Lanka, Colombo Land and Citrus Leisure Warrant 19.

Notable gainers for the day were Multi Finance, up by 26.3% to close at Rs. 27.40, Hydro Power Free Lanka, up by 22.7% to close at Rs. 8.10, and Citrus Leisure Warrant 19, up by 21.4% to close at Rs. 6.80.

Lanka Securities said the cash map for the day was 68.23%. Foreign participation was 15.06% of total market turnover and foreigners were net buyers of Rs. 42.5 million.

NDB Stockbrokers said despite the lacklustre start, the market picked up during the latter part with heavy activity in speculative counters such as Colombo Land, HVA Foods and Lanka Hospitals.

Accumulation continued in Banking and Finance sector counters such as Commercial Bank voting and nonvoting and Central Finance, while index heavy John Keells Holdings also witnessed collection.

The Banking, Finance and Insurance sector became the highest contributor to the market turnover (due to Central Finance and Commercial Bank) and the sector index gained 1.69%. The share price of Central Finance increased by Rs. 3.10 (2.26%) to close at Rs. 140 while Commercial Bank’s share price edged up Rs. 0.70 (0.68%) to close at Rs. 103.50.

Colombo Land and Colombo Investment Trust were also seen among the top contributors for the day. The share price of Colombo Land gained Rs. 4.50 (14.06%), while Colombo Investment Trust saw its share price sliding Rs. 0.10 (0.10%) to close at Rs. 104.90.

DNH Financial said although it views the opportunities in the local Bourse from a bottom-up perspective, at a macro level, economic growth would continue unabated, notwithstanding expectation of a rise in inflationary pressures due to cost push factors caused by the rupee depreciation and high oil prices.

“We believe that the Government will have the capacity to fuel economic growth not only by strong domestic consumption but also supported by access to foreign capital at attractive rates, thereby creating multiple, interrelated drivers for economic expansion. In balancing what we consider the compelling opportunities provided by the Sri Lanka Bourse, we see particular value in domestically-focused companies, which should experience less earnings volatility against an uncertain global backdrop. Among domestically-oriented stocks, we are buyers of selected counters in the Consumer, Industrial, Diversified, Banking and Hotel sectors, which we believe are likely to attract investors who will appreciate their potential upside,” DNH opined.