Super September!

The month of September has arrived and for the Colombo stock market if history repeats itself, then it should be a bullish 30 day period.

An analysis of the stock market’s performance between 2002 and 2010 has revealed that the month of September has been the best on average during the eight year period.

As the graph illustrates, September has produced an average positive movement of near 10% throughout 2002 and 2010 with last year producing the best return of near 24%. The only exception had been in 2008 when the Colombo Bourse dipped in September in tandem with the worst period in history.

How the market has bounced back in the past few days though moderately, gives some hope. So far this week which also marked the end of August, the market’s value had improved by Rs. 9 billion whilst the ASI had gained by 27 points. This is on account of improved investor sentiments, a new round of retail speculative play and return of local institutions.

The Colombo Bourse ended August with only 3.67% year-to-date gain in terms of ASI (still Asia’s second best performer) whilst the MPI had gone south by 11.7%.

Whilst many agree the current valuations are attractive for discerning investors, the market continues to yearn for more of the latter than the ‘living for the day’ type.

Macro-economic fundamentals are also positive to equity market investing with annual inflation slowing to a 7 month low in August, whilst interest rate environment remaining low as well.

Analysts said that a good mix of retailers and foreign and local institutional investors will hold the key for the Colombo Bourse in September. For those with weaker hearts a peep into history might be a source of strength.