Uptick in investor sentiment at CSE

Merchants Bank Plc turns to a rights issue to raise Rs 2.24bn

Hiran H. Senewiratne

Investor sentiment at the Colombo Stock Exchange (CSE) rebounded to a great extent yesterday spurring a bullish session while also attracting a modest net foreign inflow into the market, stock market analysts said.

During the day 107 counters indicated positive gains and only 71 counters negatively contributed to the market. Both stock prices gained considerably whilst turnover touched to Rs 3. billion mark with seven crossings. Both indices moved upwards. All Share Price Index was up by 36.9 points and S&P SL20 up by 29.96 points. 

Turnover stood at Rs 3.22 billion while crossings reported in HNB (Non Voting) 5.6 million shares crossed for the tune of Rs 604 million and its share price traded for Rs 107.50, Cargills 350,000 shares crossed for Rs 84.8 million and its share price traded at Rs 242, Pan Asia Power 7.5 million shares crossed for Rs 30.7 million and its share price traded at Rs 4.10, Access Engineering one million shares crossed for Rs 20.8 million and its share price traded at Rs 20.80, Alumex 1.5 million shares crossed for Rs 21.9 million and its share price traded at Rs 13.90, Prime Residencies 1.9 million shares crossed for Rs 21.6 million and its share price traded at Rs 11 and Softlogic Capital 5.2 million shares crossed for Rs 20.2 million and its share price traded at Rs 20.2 million.

In the retail market, the top five companies that mainly contributed to the turnover were Royal Ceramic Rs 181 million (4.6 million shares traded), Alumex Rs 151 million (10.6 million shares traded), LOLC Rs 132 million (348,000 shares crossed), HNB (Non Voting)  Rs 112 million (1.07 million shares traded) and Swisstek Rs 89.9 million (2.8 million shares traded).

Amid those developments Merchants Bank Plc announced a rights issue to raise Rs 2.24 billion. The proposition of the rights issue is that nine new shares will be issued to four existing shares at Rs six for a share. The company intends to issue 373 million new shares under the rights issue. The purpose of the issue is to meet the capital adequacy requirement imposed by the Central Bank of Sri Lanka.

During the day 140.8 million share volumes changed hands in 25,786 transactions. High net worth and institutional investor participation remained subdued during the day. Mixed interest was observed in Prime Lands Residencies, HNB and Alumex, whilst retail interest was noted in several counters.