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‘‘Heavy dips follow the Bull Run; YTD net foreign inflow surpasses LKR30 bn …’’

Posted on the September 20th, 2012 under Market Reports by

Daily Trade Journal – CSE Diary for 19.09.2012

The Colombo stocks suffered another dip writing off a total of 119 points including yesterday’s plunge. Selling pressure remained heavy throughout the day amidst profit taking. The index see-sawed but remained predominantly in the negative territory. During the 1st hour, the index which crashed down by 122 points to 5,781 points, followed a recovery to mitigate losses to only 20 points. However, the bourse re-entered the downward trend at much slower pace to close the day with a dip of 62 points.

The long awaited profit taking is taking a toll on the index. However, the market valuations and selected fundamentally strong counters continue to trade at attractive valuations. Despite the dips in the index foreigners continue to be positive on the market taking advantages of the counters at bargain prices resulting the YTD net foreign inflow to top LKR30bn. Softlogic Equity Research believes that the downward glide is likely to be short-lived and advises clients to buy into the downward trend and take advantage of the counters that trade at bargains.

John Keells Holdings was the leader in the performers’ list supported by 2 crossings accounting for 200k shares dealt at a similar price of LKR218.0. Heavy on-board trading was witnessed in the counter with trade volume reaching 845k for the day. The counter closed day with a gain of 0.5% at LKR218.0. Sampath Bank which outperformed all banking sector counters in terms of capital gain during the bull run saw some selling pressure today. The counter declined 1.5% to close at LKR211.6. Despite the steep price appreciation in the last few weeks, the counter still trades at attractive valuations. Seylan Bank [Non-Voting], a counter trading below book value which gained investor attention in the latter stage of the bull run saw its price being slashed 4% at its close of LKR33.5 with 885k shares being traded during the day.

The rest of the market was dominated by heavy selling pressure in the speculative counters as retail investors were selling out to save their portfolios. Nation Lanka Finance (-3.3%), Central Investment and Finance (-24.5%), Lanka Hospitals (-1.1%), Kalpitiya Beach Resort (-5.5%), Colombo Land (-2.6%) and Citrus Leisure (-2.2%); were some of the heavily traded counters amidst their dips.

Browns Beach Hotel, a new comer to the speculative list, remained unhurt by the rest of the market as it reached another 52-week high of LKR29.5 before closing at LKR28.8, gaining 5.5% today.

European Stocks Pare Advance as Insurers Decline: European stocks pared their advance as insurance companies dropped, offsetting the Bank of Japan’s decision to opt for further asset purchases. U.S. index futures were little changed, while Asian shares rose. The Stoxx Europe 600 Index rose 0.1% to 273.97 at 9:57 a.m. in London.

Oil Advances After Japan Expands Stimulus Plan: Oil rebounded from the lowest close in more than two weeks in New York amid speculation that Japan’s expanded program of monetary easing may bolster fuel demand in the world’s third-biggest crude user. Oil for October delivery gained as much as 88 cents to USD96.17 a barrel in electronic trading on the New York Mercantile Exchange.

Download the full report (PDF, 2.42MB)

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