Buying interest in primary dealer stocks following TB oversubscription

By Hiran H.Senewiratne

CSE trading was down due to a decline in share prices in mainly Index- weighted counters, such as, Expolanka Holdings and Commercial Bank, yesterday. However, buying interests were noted in primary dealer stocks because at the previous day’s Central Bank Treasury Bill (TB) auction, Rs 98 billion worth of TBs were oversubscribed, market analysts said.

It is said that the three-month TB interest rate declined by 63 basis points, six- month TB interest rate declined by 18 basis points and one year TB interest rates declined by 11 points. This declining trend created some interest in primary dealer counters, market analysts said.

The recent comments of the Central Bank Governor Dr Nandalal Weerasinghe to the effect that IMF negotiations are likely to be concluded in the early part of the year, while the inflation projected as per this year would likely to come down, pepped-up the market. These revelations have created some positive sentiment for the stock market, market analysts said.

Amid those developments shares slipped in mid- day trade yesterday, running on prior sentiments of declining interest rates and a heavy liking towards life insurance shares, an analyst said.

Amid those developments both indices moved downwards. The All-Share Price Index went down by 39.82 points and S and P SL20 declined by 13.1 points. Turnover stood at Rs 2.3 billion with three crossings. Those crossings were reported in Agstar PLC, which crossed 4.3 million shares to the tune of Rs 70 million, its shares traded at Rs 16, JKH 428,000 shares crossed to the tune of Rs 59.3 million and its shares fetched Rs 138.50 and RIL Properties Ltd crossed five million shares to the tune of Rs 30 million, its shares traded at Rs 6.

In the retail market top seven companies that mainly contributed to the turnover were, Softlogic Capital PLC Rs 502 million (35.2 million shares traded), Hemas Holdings Rs 209 million (3.6 million shares traded), Agstar PLC Rs 140 million (8.2 million shares traded), Capital Alliance Rs 135 million (4.6 million shares traded), Lanka IOC Rs 131 million (652,000 shares traded), Softlogic Life Insurance Rs 119 million (1.2 million shares traded) and JKH Rs 116 million (841,000 shares traded). During the day 120 million share volumes changed hands in 18000 transactions.

It is said high net worth and institutional investor participation was noted in Lanka IOC and Agstar. Mixed interest was observed in Ambeon Capital, Softlogic Life Insurance and Capital Alliance, while retail interest was noted in Softlogic Capital, SMB Leasing non-voting and LOLC Finance.

The Insurance sector was the top contributor to the market turnover (due to Softlogic Life Insurance) while the sector index gained 0.31 per cent. The share price of Softlogic Life Insurance recorded a gain of Rs. 1.40 (1.45 per cent) to close at Rs. 97.90.

The Energy sector was the second highest contributor to the market turnover (due to Lanka IOC), while the sector index decreased by 3.23 per cent. The share price of Lanka IOC decreased by Rs. 7.50 (3.56 per cent) to close at Rs. 203.25.Yesterday, the Central Bank- announced US dollar buying rate was Rs 359.13 and the selling rate Rs 371.57.

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