CSE Diary for 23.04.2012
Market continued to show weakness and lack of direction with both indices snapping early gains to finally close with marginal losses. Within the first hour, the benchmark index gained as much as 58 points while the liquid Milanka gained a high of 52 points supported by illiquid counters. Nestle and Bukit Darah were the top positive contributors to the index.
Activity remained low as turnover recorded a mere LKR246mn, with volume level moderating at 25mn shares. The continued rises in interest rates are likely to adversely affect the attractiveness of equity counters in the short term. Though a high cash allocation is advised, the equity portion needs to be invested in fundamentally sound counters with sustainable growth in profitability. A high dividend yield is also a factor to be considered in a rising interest rate scenario.
The banking sector heavyweight Commercial Bank topped the turnover list with buying interest pushing the counter to a 3 month high (last recorded on 30.01.2012) of LKR105.2. The counter saw only 231k shares changing hands as it gained +1.2% for the day. Index heavy, John Keells Holdings was next in line in the turnover list with 93k shares changing hands as the counter closed flat for the day at LKR206.0.
More banking sector counters consisting of Hatton National Bank and DFCC Bank attracted investor interest. The former however ended on a negative note to close at LKR97.0 despite trading attractive valuations. The latter gained +0.7% as it closed the day at LKR120.0. CIC Holdings continued to see blocks being taken on board as the counter today registered its sole transaction of 100k shares dealt with on board at a price of LKR100.0.
Meanwhile selected counters including Colombo Fort Land (-0.6%), Vallibel Finance (0.8%), Renuka Holdings (1.3%) and Tokyo Cement [Non-Voting] (-2.5%) also gained investor attention.
European Stocks Drop as Manufacturing Shrinks: European stocks fell after reports showed manufacturing contracted in the euro area and China and as Dutch Prime Minister Mark Rutte failed to reach an agreement with a coalition party over austerity measures. Asian shares and U.S. futures also slid.
Oil Drops From Three-Day High: Oil fell from the highest price in three days in New York after Chinese oil demand declined to the lowest level in five months. Crude for June delivery fell as much as 74 cents to $103.14 a barrel in electronic trading on the New York Mercantile Exchange.