COLOMBO, Dec 10, 2014 (EconomyNext) – Sri Lankan stocks closed higher Wednesday propelled by off-market negotiated deals and bargain hunters joining the fray, with interest seen especially in banks given expectations of a pick-up in private sector credit.
Lanka Indian Oil Corp (LIOC) and Hemas Holdings also drew interest, brokers said.
The All Share Price Index closed at 7,254.28, up 36.34 points while the S&P SL20 index, which tracks the top 20 largest and most liquid stocks on the Colombo Stock Exchange, rose 19.71 points or 0.5 percent to reach 4,083.41.
Turnover went back up to just over a billion rupees, largely because of several crossings or off-market negotiated deals.
"If you take out the crossings turnover was only around 600 million rupees," said Dimantha Mathew, Manager Research at First Capital Equities. "Compared to the last few days we saw some buying interest coming back into the market."
LIOC saw significant buying interest following the fall in oil prices and there was buying interest in the banking sector especially bigger banks, mainly Sampath Bank, Commercial Bank and Hatton National Bank (non-voting).
"HNB and Sampath are at attractive levels with September-quarter earnings released in November showed good results," Mathew said. "We expect private sector credit to pick up from this quarter onwards. So next year might be very good year for loan growth."
The market was spooked two weeks ago and turned choppy with the announcement of a snap presidential poll followed by the defection of the ruling party’s general secretary, Health Minister Maithripala Sirisena.
Sirisena announced he will challenged President Mahinda Rajapaksa in the January 8 poll as the common candidate of a newly united opposition who have closed ranks to try prevent Rajapaksa’s unprecedented bid for a third term.
Mathew said bargain hunters had entered the market in the last few days.
"We’ve seen these bargain hunters coming in and buying stocks suddenly. That may also be a reason why the market is up."
He said they suddenly saw heavy buying interest in Sanasa Development Bank which was one of the most heavily traded stocks of the day.
The interest in Hemas may be driven by the group’s sale of its power subsidiary which will boost profits in the next quarter.
"We have been very positive on Hemas but then after it crossed the 75-rupee mark we put a sell on the share. It may be moving up because its FMCG (fast moving consumer goods) business and hotels have been doing very well," Mathew said.
"Also, after it sold Hemas Power there could be a large capital gain – a big, albeit one-off, growth in profitability."