LNP – Stock market soars on strong Cabinet; improved outlook with political stability

• Market capitalisation up by Rs. 32 b during two days
• S&P SL 20 Index up over 2%; Commercial Bank and JKH help indices gain; Sampath, DFCC LOLC other contributors to high turnover
• HNWI Nimal Perera accounts for Rs. 1 b turnover yesterday; Rusi Captain active too

The Colombo stock market sustained its rebound for the second consecutive day raking up value by over Rs. 32 billion with popular high net worth individuals Nimal Perera and Rusi Captain leading from front along with institutional investors.

On top of 1% gain on Tuesday, the ASPI rose by over 24 points or 0.5% and S&P SL 20 by 2% or over 45 points. Turnover was over Rs. 2.7 billion a level maintained for the second consecutive day.

Brokers and analysts attributed the rebound in sentiments to the appointment of a strong Cabinet, following the landslide victory by the Sri Lanka Podujana Peramuna (SLPP), as well as selection of former Central Bank Governor Ajith Nivard Cabraal as the State Minister of Finance, Capital Markets and Public Enterprise Reforms, as well as former SEC Chairman and public-private sector famous Dr. Nalaka Godahewa as the State Minister of Urban Development. 

Seasoned investor Nimal Perera tweeted mid-day he was responsible for half of the turnover at that time. When trading ended he had dealt with shares worth Rs. 1 billion. Now regarded as largely focused on fundamentally sound blue chips, Perera yesterday had bought 2 million shares of Sampath Bank before selling 1.1 million shares of same. He also sold 4 million shares of Commercial Bank after having bought 1 million shares on Tuesday. In another move to boost liquidity, Perera had also sold 2 million shares of JKH on Tuesday and moved to buying side yesterday collecting 1 million shares.

Bulk of Commercial Bank shares had been bought by Rusi Captain, whose holding in the largest and most profitable private sector bank is now estimated at around 14 million shares. LOLC, in which he has about 14 million shares, is a new stock favoured by Captain. 

First Capital said CSE concluded the day with gains in the index for the second consecutive day as market participants applauded the political stability created by the new Government. 

It said with the improved investor climate, institutional investors remained active and demonstrated interest in the blue-chip counters with COMB leading the turnover for the second successive trading session. 

Moreover, parcel trades in DFCC, COMB, SAMP, JKH and LOLC contributed to the turnover amounting 42%.  

“Index experienced an uptick during the first couple of minutes and thereafter witnessed slight dip followed by a gradual recovery. Afterwards bourse recorded a volatile movement and closed at 5,220 gaining 25 points,” First Capital said. 

NDB Securities said the ASPI closed in green as a result of price gains in counters such as Commercial Bank, John Keells Holdings and Sri Lanka Telecom.

Crossings were witnessed in Sampath Bank, Commercial Bank, John Keells Holdings, DFCC Bank and LOLC Holdings. 

It said mixed interest was observed in Hatton National Bank whilst retail interest was noted in Browns Investments and Hatton National Bank non-voting.

The Banking sector was the top contributor to the market turnover (due to Commercial Bank, Sampath Bank and DFCC Bank) whilst the sector index gained 2.73%. The share price of Commercial Bank increased by Rs. 4.40 (5.74%) to close at Rs. 81.00 while the share price of Sampath Bank gained Rs. 2.60 (2.08%) to close at Rs. 127.50. Furthermore, the share price of DFCC Bank moved up by Rs. 0.50 (0.84%) closing at Rs. 59.80 whilst foreign holdings decreased by 6,985,570 shares.

Capital Goods sector was the second highest contributor to the market turnover (due to John Keells Holdings) whilst the sector index increased by 0.84%. The share price of John Keells Holdings recorded a gain of Rs. 3.20 (2.76%) to close at Rs. 119.20.

LOLC Holdings was also included amongst the top turnover contributors. The share price of LOLC Holdings appreciated by Rs. 0.90 (0.63%) to close at Rs. 144.10.

Foreigners continued to be on the sell side, extending the year to date net outflow to near Rs. 27 billion. The bulk of yesterday’s net selling of Rs. 570 million (lower in comparison to Rs. 1.2 billion on Tuesday) was on account of DFCC Bank.

Apparent bearish sentiments Thursday and Friday despite the resounding SLPP victory caused concern among capital market promoters, as the indices were flat or dipped, though finishing the week on the up. Gains in the past two days have reduced ASPI’s year to date dip to below 15% whilst S&P SL 20 is down 22%.

Access Engineering and Vallibel Power Erathna announced their interim dividends of Rs. 0.50 and Rs. 0.40 per share respectively whilst Renuka Capital and Renuka Agri Foods announced their first and final dividends of Rs. 0.10 and Rs. 0.12 per share respectively.