Colombo stock market swung between gains and losses on Tuesday amid the sharp increase in Treasury yields for the fourth consecutive week. During the opening hours, All share index inclined to 7,269.86 (+0.3%) but lost the momentum in the latter part.

Bourse closed on opposite directions where core index shed 9.48 index points or 0.13% to end at 7,234.92 while 20-scrip S&P SL index managed to gain 6.86 index points (+0.17%) to close at 4,108.29.

Price declines in Selising (closed at LKR 1,550.00, -20.2%), Dialog Axiata (closed at LKR 11.60, -1.7%) and Commercial Leasing & Finance (closed at LKR 4.20, -4.6%) affected the main index performance while price advances in Hatton National Bank (closed at LKR 237.50, +1.1%), Ceylon Tobacco (closed at LKR 1,090.00, +0.9%), Access Engineering (closed at LKR 28.10, +2.9%) contributed positively to the S&P SL20 index performance.

Daily market turnover was LKR 1.8bn. John Keells Holdings emerged as the top contributor to the turnover with LKR 991mn underpinned by several crossings of 2.4mn at LKR 204.50-205.00. Commercial Bank & Sampath Bank were next best contributors to the turnover with LKR 130mn & LKR 109mn respectively. Aggregate value of crossing represented 30% of the total turnover.

Out of 256, 106 slipped, 95 advanced while 55 counters remained unchanged. Cash map advanced to 47% from 41%. 4 counters reached 52wk high prices while 11 counters touched 52wk low price levels.

All three John Keells Holdings counters attracted heavy investor preference during the session. John Keells Holdings warrant 22 declined to 52wk low price of LKR 33.10 but closed higher at LKR 34.00.

Regnis Lanka was among most favored counters during the session for the second consecutive day. Counter advanced to 52wk high price of LKR 96.80 but closed lower at LKR 94.10 (+3.3%). Access Engineering, Lanka IOC and Sampath Bank were among heavily traded counters.

Meanwhile, Colombo Dockyard and Sierra Cables advanced during the day subsequent to the dividend announcements. Colombo Dockyard declared first & final dividend of LKR 3.00 per share and counter closed at LKR 179.00 (+1.5%). Sierra Cables counter advanced to LKR 4.80 (+2.1%) supported by the interim dividend announcement of LKR 0.20 per share (DY-4%).

Foreign investors were net buyers for the second consecutive day with a net inflow of LKR 235mn. Foreign participation advanced to 41% from 25%. Net foreign inflows were seen in John Keells Holdings (LKR 238mn), Access Engineering (LKR 26mn), Commercial Bank (LKR 24mn) while net foreign outflow was mainly seen in Distilleries (LKR 58mn).

At the weekly T-bill auction, 12 month T-bill yield further increased sharply by 86bps to 6.99% while 3 month and 6 month T-bill yields increased by 91bps and 89bps to 6.89% and 6.98% respectively. At the bill auction, LKR 15bn worth of T-bills were issued while it was oversubscribed 2.8 times and LKR 16.5bn were accepted. During the year, 12 month T-bill rates increased by 99bps while 3 month and 6 month advanced by 115bps & 114bps respectively.

Meanwhile CBSL has withdrawn the restriction placed on the special standing deposit facility. During the September 2014, with the aim of encouraging commercial banks to utilize the substantial amounts of excess liquidity to enhance the flow of bank credit to the private sector at more reasonable interest rates, CBSL limited access to standing deposit facility for the open market operation participants. Accordingly, the 5% SDF rate was withdrawn with effect from 2 March 2015.

Lanka Securities Research