Colombo bourse shares have been recovering slowly this week and analysts say that stocks are suddenly looking very attractive again, which may be owing to unchanged policy rates and the recent currency depreciation.
"Markets have over-adjusted on its way down (as it tends to do also on its way up) and those with the capacity to invest are doing so now," Deshan Pushparajah, Head of Capital Markets at Capital Alliance noted to the Business Times. He also said that the recent devaluation of the rupee has also made Sri Lankan stocks very attractive for foreign investors.
"With some shares also trading below their book value, they would give investors adequate return," he added.
Some analysts said that change in the bourse was after the Central Bank said it was not changing Repo and Reverse Repo rates, in a monetary policy statement this week.
But others said that policy rates to be kept unchanged were the consensus in the market and that it did not provide any positive surprises.
Danushka Samarasinghe, Director TKS Securities noted that the market was on an over-sold position for the last few months and a reversal of the declining trend was far overdue. "As such I believe the market recovery on Thursday was due to a positive twist in sentiment while having weathered negative news during the last few months," he added.
He said that in the ensuing months the market would recover gradually and would follow earnings growth which has been rather robust last quarter.
He also added that it's preferred that there's a gradual upswing in the market and many are hoping that the investing community would be mindful of the losses they accumulated by being part of speculative plays.
"Accumulating fundamentally strong counters trading on low multiples would be the basis a rational minded investor should pursue," he further noted. |
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