Strong financial results to drive stock market upwards
Channa Kasturisinghe
MARKET: Investors should focus more on positive financial
results of leading companies when making investment decisions rather
than being distracted by political developments, stock analysts said.
The Colombo stock market which rewrote its record books recently with
the benchmark All Share Price Index (ASPI), surpassing the 3,000 level
for the first time in history is bound to set more records this year.
Its market capitalization is expected to top Rs.1000 billion mark but
analysts said how soon it would happen may depend on the way the
investors would react to various political developments.
The ASPI has recorded a growth of over 40 in the year 2006 and it is
expected to grow at a higher rate in the current year considering the
excellent financial performance of several companies, especially in the
telecommunication sector.
The market activity levels improved remarkably last year and the
trend has continued this year also with the market recording nearly
Rs.800 million average daily turnover. However, analysts said that
violent incident such as what took place in the East yesterday should
not hamper investor confidence and they should focus more on
fundamentals.
Both indices recorded losses yesterday but the turnover remained
moderate due to continued investor interest in the telecommunication
sector.
Traders said although they expected the market to continue its upward
trend yesterday the disturbing news of the LTTE attack targeting a
Government Minister and diplomats in the east caused the indices to fall
sharply in the morning.
However, the interest in the telecom sector shares checked the
downward movement but there was also profit taking which also
contributed to the decline of the indices. The All Share Price Index
fell by 15.83 points to close at 2,996.49 points and the Milanka Price
Index (MPI) lost 12.42 points to close at 4,202.34 points.
Yesterday’s turnover was Rs.548 million. Once again it was Sri Lanka
Telecom which contributed to about 25 percent of the turnover with over
3.1 million shares being sold. The counter which rose by about 9 percent
on Monday with over seven million shares being traded dropped by 50
cents to close at Rs.41.25.
Some analysts said that if not for yesterday’s incident in the East
the counter and the market in general would have experienced an upward
movement. The other telecom sector counter Dialog also traded heavily
with over 1.3 million shares changing hands. The share remained flat at
Rs.27.75.
Angelo Ranasinghe of Bartleet Mallory Stock Brokers said that
investors need not panic due to incidents such as the yesterday’s attack
in the East and the should concentrate more on fundamentals.
“These kind of disturbing incidents can happen once in a while as we
have not found a permanent solution to the North East problem. But the
investors should also consider that despite the situation almost all the
leading companies have recorded excellent financial results last
quarter,” Ranasinghe said.
S. Umasudhan of SC Securities said that telecom sector companies such
as Sri Lanka Telecom and Dialog are expected to record impressive
financial results in the future as the sector is growing at a rapid pace
internationally and locally. |