Gas discovery fails to ignite Colombo stock market

Tuesday, 4 October 2011 00:32 -     - {{hitsCtrl.values.hits}}

By Dinali Goonewardene

The discovery of natural gas with potential for liquid hydrocarbon in the Mannar basin has failed to ignite investors in the Colombo stock market, who were busy fuelling the bizarre run of speculative stocks.

The Colombo Bourse closed flat whilst market turnover was only Rs. 2.1 billion.

The Presidential announcement on Sunday followed by explorer Cairn India’s confirmation of discovery of natural gas in the very first well drilled has been widely cited as a  major breakthrough for Sri Lanka’s quest for energy security as well as one that would ease off pressure on the country’s foreign reserves owing to the high import bill. Whilst analysts admitted that commerciality of natural gas or oil was still pending and would take longer time, the fact that Mannar basin is now turning out to be a major geological play is a key development with far-reaching positives.

However, except CT Smith none of the leading brokers recorded the Presidential revelation or the discovery, in their market reports. This prompted analysts to claim that the capital market participants were perhaps blinded by investors’ bizarre preoccupation with highly speculative stocks.

Sentiments across the Palk Straits however were different as share price of Cairn India gained (see box story).

NDB Stockbrokers said that the week started off with a sluggish sentiment as both indices remained dull. The MPI lost its ground slightly by 0.2% whilst the ASUI remained stagnant.

DNH Financial said the market opened the fourth quarter on a subdued note.

Arrenga Capital said retail investors continued with their dominant play on the speculatively-driven lot whilst institutions were seen active in a few counters of the high index calibre. However, activity levels remained quite low as the market gradually lost momentum from its initial start in the green to stand in the red at close, it added.

The broker also noted that though the YTD performance of the market is up by 2.2% after today’s trading, Sri Lankan equity YTD growth rates have dipped from 4.8% last month. September was mostly dominated by speculative trading with the ASPI seen on a fluctuating trend.

Colonial Motors became the highest contributor to the market turnover and its share price increased by Rs. 25.50 (5.47%) and closed at Rs. 494.90.

Following this, motor sector counters United Motors, Diesel & Motor Engineering and Sathosa Motors also saw some active play as they registered price gains of 5.8%, 1.9% and 2.9% respectively.

Continued interest in Ascot Holdings was witnessed as it contributed heavily towards the market turnover. The share price decreased by Rs. 5.20 (2.80%) and closed at Rs. 181. Regnis Lanka managed to gain Rs. 48.60 (11.04%) and closed at Rs. 492.00.

Premier blue chip John Keells Holdings contributed heavily to the market turnover. Its share price came down by Rs. 2 (0.97%) and closed at Rs. 203.

Last week’s quiet play in the poultry counters gathered active participation today with Ceylon Grain Elevators along with its 57.2% owned subsidiary, Three Acre Farms, proving to be the key focus as they hit intra-day highs of Rs. 124.8 and Rs. 120 before closing with a 1.6% and 1.2% gain at Rs. 116.1 and Rs. 110.2 respectively.

Retail chase on the low index calibre was predominant in E-Channelling, Ceylon Tea Brokers, Renuka Agri Foods and Raigam Wayamba Salterns as the counters appreciated 1.2%, 11.0%, 1.4% and 2.2%.

On the other hand, profit taking in Tess Agro, Lanka Hospital Corporation and SMB Leasing resulted in the counters to register price dips of 3.3%, 3.8% and 3.7% respectively. Interest in Laxapana Batteries was also evident, whilst renewed interest in Colombo Dockyard saw the counter register a mid-sized block of 96,000 shares, dealt at Rs. 260 each.