Blue chip stocks lift NSE 20-Share Index to six-month high
Posted Tuesday, June 26 2012 at 20:15
The NSE 20-Share Index has touched a six-month high boosted by price increases of major blue chip stocks that constitute key market indicators.
The index, which tracks price changes of 20 blue chip stocks that are representative of the market, surged past Monday’s high of 3,704.7 points to hit 3,738.15 points on Tuesday.
Old Mutual securities said that the index rose on the back of good performance of stocks such as British American Tobacco (BAT).
“The latest rally was supported by the gains of British American Tobacco which accounts for the largest portion of the index given its high share price,” said Old Mutual in a research note.
BAT has gained 50 per cent in the past six months to trade at Sh369 a share.
Market capitalisation, which measures total shareholder wealth on the bourse, is up 21 per cent to Sh1.05 trillion from Sh867 billion on January 26.
“This is good news to investors who saw dismal performance of their investments on the bourse last year,” said Mr Eric Musau, an analyst at Standard Investment Bank.
Speculative buying continued to drive up KenolKobil’s share price, pushing it up by nine per cent to Sh15.95 from Sh14.25.
Reports that KenolKobil’s acquisition price will be announced this week have pulled investors into the stock.
Kenya Airways’ shares gained slightly from Sh12.60 to Sh12.85 two days after the new rights shares started trading. Kamau Kuria of Old Mutual Securities said heavy investor demand was pushing up share prices.
“Share prices were subdued last year so investors, especially foreigners, were taking advantage of cheaper prices,” said Mr Kamau.
Cigarette taxation was left unchanged in the Budget, prompting investors to speculate that the company would record high earnings this year.
Increased foreign investor interest in the two largest banks, KCB and Equity Bank, has also seen them command a significant portion of the markets total turnover.