Daily Trade Journal – CSE Diary for 10.09.2012
Today’s investor orbit was around the retail speculative darlings and blue chip heavy weights. Selected speculative stocks on the market advanced at a higher rate than any other group of stocks, far outpacing their high-quality peers. The Milanka Index, holding a higher comprise of the small-mid caps, speeded over a 150 point gain after 7 months to close 5,248.84 points. The ASPI by no means was held back as it was also seen spiking up 95.18 points at its close of 5,592.03 points to concrete above the 5,500 threshold taking broad steps towards the 6,000 point breach. S&P SL20 index gained 42.7 points as it closed above 3,000 points today. Volume too remained steady with turnover clocking LKR1.9 bn. September trading led the market capitalization to grow 8% to LKR2,138.3 bn whilst YTD performance slip has been mitigated to -7.8% from a worst of -22.0% in June 2012. Five shares gained for every one that lost today. Sound investment focusing on steady portfolios remained undisturbed from the speculative noise assuring an across the board grip on the market’s bull run.
Certainly, small-cap investors have been smitten with their speculative favourites of late. But does that mean the bull run in the small-cap sector is over? The question remains unanswered as the possibility of the irrational buying binge could continue. However, one has to be mindful of the fact that the speculative stocks that leads the way will come crashing down the hardest, just like they did during the last correction. We continue to harshly pronounce on words such as ‘valuations’, ‘earnings’ and ‘revenue growth’ to re-enter the vocabularies of the investors as our vote remains steady for the potential picks diverting to our preferred portfolio [Refer Weekly Issue 10, Pg09]. We stress on the danger in holding any penny plays as one can’t stomach to see another harsh fall.
Even the day’s crossing board moved in line the overall tune of the bourse as a 1.9mn share crossing was struck on Environmental Resources Investment at LKR16.0. HVA Foods was the day’s frontrunner. Price appreciation of HVA Foods remained unscathed from its morning sprint to balloon as much as LKR18.0 before closing with a heft gain of LKR17.7 (+25.5%). Pan Asia Bank grabbed renewed play after three on-board deals counting 1.8mn shares was seen dealt at prices LKR20.0 and LKR20.1. Coco Lanka and Renuka Agri Foods, one of the very few exposed to benefit of the dollar devaluation, saw active renewed play as the price escalated 6.6% and 3.9% at their conclusion of LKR59.7 and LKR5.3 respectively. A 249.4k share quantity of Ceylon Theatres was seen traded in the market at LKR130.0.
Retail investors’ burst of energy continued without any interruption with the price gainers’ slot being taken up by the penny stocks. Following made up retailers’ close watch list; Ceylinco Seylan Developments [+9.2%], The Colombo Fort Land & Building [+9.6%], Colombo Land & Developments [+9.1%], Lanka Hospital Corporation [+7.6%], Panasian Power [+10.0%], Radiant Gems [+15.1%], Citrus Leisure (Normal & W : 0019) [+2.6%, +4.5%], Freelanka Capital Holdings [+10.3%], Chilaw Finance [+20.9%], Union Bank [+9.6%], Touchwood Investments [+11.6%], Ceylon Grain Elevators [+12.7%], Three Acre Farms [+12.9%], Bairaha Farms [+12.4%] and E Channelling [+1.7%].
The day’s attention favouring the finance sector chorused our Friday’s Weekly Issue’s comment in rating the banking stocks as still undervalued. Sampath Bank, National Development Bank, Commercial Bank and Hatton National Bank [Voting & Non-Voting] grabbed the prime banking interest play list whilst Vallibel One, Singer Finance and Asian Alliance also some active play.
Kalpitiya Resorts saw some sizeable quantities being exchanged on board as it rocketed 16.4% at the close of LKR7.1. PC House, though ridden by retailers, also saw similar play. Colonial Motors joined in the United Motors for the motor sector gains as each gained 20.1% and 6.1% at their close respectively. Dialog Axiata encountered some considerable trades during the day as six on-board trades added 1.1 mn shares to the counter’s volume for the day.
European stock futures were little changed, after the region’s equities posted their largest weekly gain in three months, as China’s imports unexpectedly fell whilst Asian stocks swung between gains and losses as reports from the U.S., China and Japan that showed slowing growth in the world’s biggest economies stoked speculation central banks will add to stimulus measures.: Euro Stoxx 50 Index futures declined 0.2% as of 7:19 a.m. in London. The MSCI Asia Pacific Index added 0.1%.
Oil traded near the highest level in a week amid speculation that countries from the US to China will add economic stimulus, countering signs of a slowdown that threatens fuel demand: Oil for October delivery was at USD96.34 a barrel, down 8 cents, in electronic trading on the New York Mercantile Exchange at 1:30 pm Singapore time.