Market lets down Mahinda!
- Back to square one as Bourse turns volatile with sharp swings; investors anxious, await decisions by SEC
The Colombo stock market yesterday lost steam and seemingly let down the euphoria triggered by the unprecedented and positive meeting between brokers and President Mahinda Rajapaksa the previous day.
In a volatile session in terms of movement of the two indices the Bourse scraped through to finish flat though turnover was an encouraging Rs. 1.67 billion.
When the market opened encouraged by upbeat sentiment from brokers, the Bourse shot up to triple digit gains but failed to keep momentum as investors turned profit hungry unsure whether the Monday’s Bull run will sustain.
Some analysts linked the yo-yo type behavior to investors turning anxious and panicky over lack of definite confidence whether the SEC will conform to much of the discussions that took place at Temple Trees the previous day. The SEC Commissioners did meet yesterday but there was no formal announcement of the outcome. Analysts said that unless and until there is clarity and firm decisions, the market will remain on the fence.
Others however were encouraged by the return of institutional investors as well recovery in blue chips whilst second tier and speculative stocks continued to reign yesterday as well.
HVA, once again emerged biggest turnover generator with Rs. 165 million via trade of 4 million shares (though it closed 4% lower) whilst debutant Entrust saw 3 million of its shares trade for Rs. 150.2 million. It topped the list of gainers up 100% to close at R.40 from its reference price whilst it hit an intra-day high of Rs. 55.50 prompting some to claim that the share was subject to manipulated play.
Reuters said stock market ended flat on Tuesday after gaining more than 2 percent in early trade as retail investors booked profits, while many stayed away awaiting cues on whether the President Mahinda Rajapaksa will implement broker requests to boost the flagging bourse.
The island nation’s main share index surged 2.59 percent in early trade but closed 0.04 percent or 2.16 points weaker at 6,020.08.
The bourse surged 4.14 percent on Monday from a 14-month low after Rajapaksa met the heads of stock brokerages after last week’s currency devaluation and foreign selling amid a tightening credit crunch.
“It was an artificial hype yesterday and the market gain was purely because of sentiment after the president’s meeting. But today we saw no follow-up of that meeting and those requests being implemented,” said an analyst on condition of anonymity.
Brokers have complained investor sentiment has turned negative due to firmer regulation by Securities and Exchange Commission (SEC), which has initiated probes into share price manipulation and tightened credit rules.
Total volume was 99 million shares, against a five-day average of 82.2 million. The 30-day and 90-day average trading volumes were 58 million and 101.3 million. Last year’s daily average was 67.9 million.
The bourse has fallen 11.3 percent since Oct. 1 and is Asia’s 11th-best performer with a year-to-date loss of 9.28 percent. It gave Asia’s best returns in 2009 and 2010.
The bourse saw a net foreign outflow of 47.3 million rupees on Tuesday, and thus far in 2011, offshore investors have sold 17.5 billion, and a record 26.4 billion in 2010.
On Tuesday, the bourse was in the neutral territory with the 14-day relative strength index at 39.4, above the lower neutral range of 30.
Losers outnumbered gainers by 119 to 100 on Tuesday, Thomson Reuters data showed.
The rupee closed flat at 113.89/90 rupees a dollar for the fifth straight session, dealers said.
