Sri Lanka shares becalmed

Feb 18, 2010 (LBO) – Sri Lankan shares closed virtually stagnant Thursday with trading in a speculative stock boosting turnover and some interest in property stocks, brokers said.

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The All Share Price Index closed at 3,732.77, up 0.31 percent (11.65 points) while the more liquid Milanka index fell 0.23 percent (10.01 points) to close at 4,259.24.

Turnover was 1.7 billion rupees, according to stock exchange provisional figures.

Speculative trading in Environmental Resources Investments, an investment holding company, accounted for a big chunk of the day’s trading volume.

Shares of Environmental Resources Investments, which now has a big weighting on the index, closed at 225.75, down 20.25. Its warrants also closed weaker.

The company stock price had risen sharply this year prompting the markets regulator to probe the trading.

There were two private deals in John Keells Holdings of 840,000 shares and 85,000 shares done at 170 each

There were also seven off-the-floor deals in Central Industries with a total of 504,800 shares at 230. Central Industries closed at 230 rupees, up 40.

The Colombo Fort Land & Building Co. closed at 61.75, up 15.75 with almost 1.5 million shares traded.

York Arcade Holdings closed at 14.75, up 1.25 with 952,100 shares done.

Sierra Cables, the most active in terms of volume, closed at 2.50, up 0.20 with 15.4 million shares done.

Rakshitha Perera, research manager at Bartleet Mallory Stockbrokers, said investors should focus on stocks with fundamental value and good earnings potential.

“Invetors should be concentrating on the numbers. Most quarterly results are out. They should see how the companies are going to end the year and look at a six-month horizon when investing.”

Interest rates were still relatively low, which was good for the stock market, even though treasury bill yields had begun moving up.

“Investors ought to look at stocks with fundamental value, especially companies with strategic direction and a foothold in the north and beast which is only now opening up,” said Perera. “This year only you’ll see real growth.”

Economic activity has revived in the north and east of the country, which was ravaged during a 30-year ethnic war that ended last May.

Perera said trading companies and those selling consumer, agricultural or industrial products were likely to gain.

“If there’s any weakness in the market, that’s a good time for investors to collect good stocks,” he said.

There were many stocks with low price-to-earnings ratios based on forward earnings, he added.