After taking profit, Bourse to see fresh buying

The Colombo stock market is expected to see a fresh round of buying following profit taking by investors last week.

The All Share Price Index ended with an overall dip of 0.8% as at the end of the final week of January. “The week was predominantly in the red, due to investors booking in profit, back of the market gains during the previous week. Albeit, the dip during the current week we expect the market to gain momentum this week,” Asia Securities said.

Noting that the earnings results out so far has been very encouraging, the broker is advising investors to invest mirroring the good earnings sectors/ counters.

“Few sectors that are expected to show staggering earnings results would be Banking and Finance (specially the composite insurance companies- the life segment booking profits in the December quarter), Food & Beverage sector ( specially the poultry counters ) and Plantations (backed by the rising commodity prices),” Asia said.

The broker in its weekly research report analysed the various warrants traded in the bourse and advised investors to look in to the undervalued warrants (warrants which have a traded value less than the intrinsic value). See story elsewhere on this page. Meanwhile Acuity Stockbrokers also said sound corporate earnings of the counters released so far have driven the plantation sector to a new height with the sector index gaining 11.5% last week.

“We expect investors to remain bullish on fundamentally strong counters within key sectors with sound earnings potential, while occasional profit taking to cash in on gains is expected to keep the market in check,” Acuity added.

The Colombo bourse last week witnessed active retail participation with healthy turnover levels boosted by the movement of strategic stakes as well.

NDB Stockbrokers said indices dipped with comparatively thin volumes. “Some retail investors, who were late to join the short rally, seem to hold the stocks until a direction is created. ASPI and MPI declined by 0.85% and 1.75% respectively for the week,” it added.