Perhaps reflecting the Monday’s fall as a knee jerk reaction after the reduction in import duties, motor stocks bounced back with 15.6% sectoral gain erasing losses incurred early in the week.
The sector’s price index is at a new high of 37,950 points, whilst the total return index was at 46,063 points both well above the level prior to the Government’s u-turn. Last week the closing levels of the two indices were 33,165 and 40,255 respectively. On Monday after the Government raised import duties by a low of 9% and a high 27% the sector index fell by 4%.
Part of the sharp rise in sector index was owing to Lanka Ashok zooming to a new record of Rs. 6,500.
It eventually settled down at Rs. 6,401.90, up by 40% or Rs. 1,822.40 on a volume of 6,700 shares. Lanka Ashok was the second biggest gainer percentagewise and yesterday’s new high beat the previous best of Rs. 4,300. The rise also propelled Lanka Ashok to the top 30 most valuable stocks league to rank 28th with a market capitalisation of Rs. 23.1 billion, above multinational Chevron as well as Dockyard.
Dimo also gained by Rs. 6.40 to Rs. 1,601.60 after peaking to a high of Rs. 1,620, Sathosa Motors gained by Rs. 16.30 to Rs. 284, Colonial Motors by Rs. 24.60 to Rs. 305.80 (it hit a peak of Rs. 310) and United Motors rose by Rs. 2.40 to Rs. 157.80 (hit an intra-day peak of Rs. 167). However the counters are somewhat below their 52-week high prices.
Some analysts attributed the spike yesterday to speculative interest since fundamentally the sector’s earnings will be under pressure following the hike in duty. Others said in comparison to high duties and taxes a year ago the current regime remains attractive for buying vehicles.
Lanka Ashok’s rise was linked to rumours that a share split was in the offing. All motor stocks are highly illiquid hence fetch a premium.
source - www.ft.lk
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