November cautious month for traders
View(s):The month of November saw the UNP-led coalition government announcing its maiden budget for the year 2016 with market activities remaining low during the first half of the month as investors were seen adopting a cautious approach prior to the budget, anaysts said, analysing events in the market in the past month. Despite the budget having some sound proposals to enhance investor confidence, the capital market did not react as expected, according to a Bartleet Religare report. “This resulted in the Colombo bourse closing at a near seven and a half month low by the end of November. The benchmark ASPI lost a staggering 132.91 points month on month (MoM) to close at 6,909.15 points while S&P SL20 followed suit to depreciate 145.31 points MoM to close at 3,657.69 points.” Banking sector stocks were the most hit during the month. Investors were seen moving away from banking sector counter following the unpleasant treatment received from the 2016 budget proposal, the report added.
In the healthcare sector counter, Lanka Hospitals (which is controlled by state-owned Sri Lanka Insurance) saw reduced interest during the month due to a government decision to divest from non-strategic investments in the CSE.”Activity was limited during the month with total volumes contracting by 24 per cent MoM to 491 million. Retail and institutional participation remained relatively low throughout the month.” The market posted a turnover of Rs. 13 billion, 35 per cent lower MoM with the highest contribution coming from JKH with a contribution of 25 per cent. The stock closed Rs. 5.30 higher MoM at Rs. 179.90.The report added that foreign investors aligned on to the selling side for the second consecutive month amid an expectation of a Federal Reserve rate hike in December. The cumulative net foreign outflow for the month was recorded at Rs. 71 million.