Stock market bounces back sharply

After an unusual dip on Tuesday, the stock market bounced back yesterday strongly thanks to improved sentiments leading to a fresh round of buying. The benchmark ASPI gained by 84 points or 1.2% whilst the MPI shot up by 152 points or 2.1%. Turnover was a healthy Rs. 3.2 billion. “Buoyant buying interest pushed the indices higher as a mix of speculative buying on selected mid cap stocks and steady interest on blue chips outweighed profit taking on stocks that recorded significant gains in recent weeks,” John Keells Stock Brokers said. “Indices made substantial gains after declining the previous two days,” NDB Stockbrokers said.

Premier blue chip and market heavyweight JKH peaked further to a high of Rs. 318, up by Rs. 14.70 or near 5%, marking it as its highest day gain.

Colombo Land and Development was the highest contributor (Rs. 278 million) to turnover with 10.65 million shares traded including a crossing of one million shares at Rs. 25. Its price rose by 2.58% to close at Rs. 24.

Marawila Resorts also contributed significantly to the turnover (Rs.135 million with 8.3 million shares traded) and its price rose by 23.5% to Rs. 16.60.

The market also saw three crossings involving Asian Hotels (503,000 at Rs. 200) and another involving HNB with 62,300 shares at Rs. 232.80.H rose to a new high closing at Rs. 318, up by Rs. 14.70 or 4.82%. This was its highest day gain.

Trades on the banking finance and insurance sector acounte for a bulk of the day’s activity whilst the best performing sector was IT and the worst was Construction and Engineering, though the latter saw high investor play.



Analysts also linked yesterday’s rebound to the market coming to terms with the positives of the outstanding success of the US$ 1 billion sovereign bond issue concluded on Monday with $ 6.3 billion oversubscription.

Colombo is Asia’s best performer in 2010 with a 104.7 per cent gain. The bourse has risen 22.5 per cent in September alone.

The recent surge has pushed the main index well into its overbought zone, Thomson Reuters data showed, while it is trading at a relatively high forward price-to-earnings ratio of 20.8 times, the highest in Asia, Thomson Reuters StarMine data showed.

The rupee edged up to 111.90/95 from Tuesday’s 111.92/111.95, as the Central Bank lowered the trading band by 10 cents to 111.80/112.20 amid importer demand for dollars, currency dealers said. The currency hit 21-month high of 112.85/90 Monday.

Meanwhile at this week’s Treasury Bill auction the weighted average yield of 182-day T-bill dipped to 6.95% and WAY of 364-day bill was 7.10%