Selling pressure subsides… Is a bull run round the corner?
Posted on the June 11th, 2012 under Market Reports by Softlogic Equity Research 
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CSE Diary for 08.06.2012
Both indices dwindled during the 1st hour of trading and settled to an upward trend with lower selling pressure witnessed in the market. Though no crossings were recorded today a number of large blocks changed hands in selected counters signalling signs of buying interest returning to the market.
The diversified conglomerate John Keells Holdings topped the turnover list with a number of blocks between 10k and 50k being traded on board. Despite investor interest, the counter dipped marginally by 0.3% to at LKR178.5 with a volume of 340k shares. National Development Bank, a blue chip counter trading below asset value saw strong buying interest returning as the counter gained 3% today with 577k shares changing hands. The counter witnessed 3 blocks of over 100k shares taken up on board.
Lion Brewery, the beverage sector counter with strong growth potential continued attract buying interest while its ultimate parent Carson Cumberbatch also moved into the top turnover list. A single block of 890k shares of Laugfs Gas [Non-Voting] brought the counter among the top performers as the counter gained 1.8% to at LKR11.2.
European Stocks Fall: European stocks retreated, with the Stoxx Europe 600 Index paring its weekly gain, after German exports slumped more than forecast and Fitch Ratings cut Spain’s credit rating. Stoxx 600 slid 0.7 percent to 241.07 at 11:19 a.m. in London.
Oil Heads For Longest Run: Oil fell a second day in New York, heading for the longest run of weekly losses in more than 13 years, on speculation the economies of the U.S. and China will slow and curb fuel demand. Oil for July delivery decreased as much as $2.82 to $82 a barrel in electronic trading on the New York Mercantile Exchange.
Arrenga’s Weekly thought: This week the bourse slipped below 4,750 allowing the valuations to be increasingly attractive while the market is now likely to be classified as undervalued with forward PER falling below 10x. We, at Arrenga earlier advised to start reducing cash allocation of the portfolios and to initiate equity purchases. Now, it is time advice our clients to accelerate buying into the equity market with most blue chips falling close to asset value or below asset value. With the fall of the market we are more positive on the Milanka counters while banking, manufacturing and food and beverages are the growth sectors to look forward. We advise all investors to step in to the equity market before a potential bull run beyond August 2012.
