CSE Diary for 20.04.2012
SEC’s efforts to restore some light in the market failed as yesterday’s rally did not last as some debt clearing took place. The deals in Distilleries Company of Sri Lanka, National Development Bank and Overseas Realty kept up the diminishing activity levels in the early hours of trade. A crossing of 2mn shares took place in Overseas Realty at LKR14.0 whilst Distilleries Company of Sri Lanka saw a block of 340.3k shares being crossed at LKR144.0. We noticed Distilleries of Company has been a counter that received some quiet accumulation as it trades at 10.9X on FY12E and 8.3X on FY13E earnings.
Interest continued in Lion Brewery (Ceylon) as they plan on the installation of their second brewing house so as to stand with a total capacity 2mn hectoliters. The brewer appreciated 2.5% to close at LKR220.4. National Development Bank registered a parcel of 1mn shares being taken off at LKR124.0. Other banking sector counters; Voting &Non-Voting of Commercial Bank (-1.1% and +1.2%) and the non-voting category of Hatton National Bank (up 1.1%), also saw some heavy interest.
CIC Holdings (Voting & Non-Voting) registered some active participation as it closed with a gain of 1.8% at LKR100.0 after seeing 99.5k voting shares being taken up in the market.
Asian Stocks Drop for Fourth Day: The MSCI Asia Pacific Index declined 0.5 percent to 124.19 as of 3:24 pm in Tokyo, after EU’s note on the impact of the EU crisis on the globe and the slow-down of the global economy after the US data release.
Oil Rises with business confidence improving in Germany in April: Oil rose for the first time in three days in New York, trimming this week’s decline. Crude for May delivery rose as much as 56 cents to USD102.83 a barrel.
Arrenga’s Weekly thought: As we expected Thursday’s artificial run, after the removal of the price band, lost steam reverting the bourse to its stagnant pose. Most advisors express that lack of funds and moaning clients on their declining portfolios have dried up business at the sales end. Investors have now become wary in putting fresh money into the market as they watch their current portfolio shrink. We believe there is a better way to prosper when the market is giving grounds: a well-considered policy of allocating growth and value stocks pointing for the long term with frequent portfolio rebalancing. Taking the psych of most investors when expectations soaring too high during expansions and expecting little during recessions, we advise to tiptoe slowly out of the penny stocks that are making massive losses and focus on the high DYs such as Nestle Lanka, Ceylon Tobacco, Commercial Bank, Hatton National Bank (Non-Voting), Sampath Bank and DFCC Bank whilst bargaining into the beaten downs in the Food& Beverage and Manufacturing sector.