Stock market recovers in second session and reaches 98 point level

By Hiran H.Senewiratne

The first half session of the CSE yesterday indicated a highly volatile market due to the country’s Covid 19 deaths rise, while during the second half session the stock market showed some recovery and reached the 98 point level. Buying interest was noted especially in investor favorite counters, stock market analysts said.

Despite the latest LMD-Nielsen IQ Business Confidence Index (BCI) survey indicating that sentiment surrounding the economy continued to regress in July, as 59 percent of respondents said that economic conditions are likely to deteriorate in the coming 12 months, still for all the market was able to retain a healthy turnover level, market analysts said.

Meanwhile, 10 percent of those polled feel that conditions are likely to improve during this period while another 31 percent say the economy will ‘stay the same’. According to the survey sample, long-term prospects for business are likely to improve. More than half (56 percent) of those consulted by Nielsen IQ anticipate an increase in sales volumes in the next 12 months.

The outlook for the short term has also improved slightly with 16 percent of respondents expecting an increase in sales over the next three months. On the other hand, a majority (61 percent) of executives believe that sales will ‘stay the same’ in the coming three months.

Where the investment climate is concerned, 6 percent (compared to 3 percent the previous month) describe conditions as ‘good’ while 16 percent say it is ‘fair.’ However, a majority (78 percent) do not consider this to be a good time to invest in Sri Lanka.

Amid those developments both indices moved upwards. All Share Price Index went up by 87.18 points and S and P SL20 rose by 23.72 points. Turnover stood at Rs. 4.07 billion with three crossings. Those crossings were reported in Melstacorp, where 14.75 million shares crossed to the tune of Rs. 14.75 million, its shares traded at Rs. 49.50, Ambeon Holdings 3.65 million shares crossed for Rs. 122.2 million, and its shares traded at Rs. 33.50 and Hayleys Fabrics one million shares crossed for Rs. 23.2 million, its shares trading at Rs. 23.20.

In the retail market, companies that mainly contributed to the turnover were, Expolanka Rs. 706.5 million (9.4 million shares traded), Browns Investments Rs. 386 million (58.4 million shares traded), LOLC Holdings Rs. 240 million (528,000 shares traded), Dipped Products Rs. 235 million (4.2 million shares traded) and Hayleys Fabrics Rs. 179 million (7.5 million shares traded).

Meanwhile, state-owned Bank of Ceylon’s (BOC) subsidiary, Merchant Bank of Sri Lanka and Finance PLC (MBSL) plans to raise Rs. 2.24 billion in fresh capital via a right issue.

The main purpose of the issue is to comply with the minimum capital rules of the Central Bank of Sri Lanka (CBSL). Approval for the capital raising had been obtained from the Board of MBSL, its majority owner BoC and the regulator, Central Bank of Sri Lanka (CBSL). Exhibiting full confidence in the capital raising effort and in the management of their majority-owned subsidiary and thereby guaranteeing a successful outcome to the capital raising effort, BoC with a near 75% direct ownership stake in MBSL will be subscribing to its entire entitlement in full. The issue will be on the basis of nine new shares for four held, resulting in the issuance of 373.2 million new shares at Rs. 6 each. The stated capital of MBSL at present is Rs. 2.12 billion. During the day 182.2 million share volumes changed hands in 25546 transactions.