Thai shares closed higher on Tuesday as bargain hunters snapped up big-cap stocks hit hard by concerns about escalating violence in the largely Muslim south.
The most actively traded were shares in top energy firm PTT PCL, the largest firm by market capitalisation, which rose 0.7 percent to 139 baht due to their cheap valuation, analysts said.
"With the recent correction in share prices, we believe that PTT's valuation is attractive given its long-term growth potential," ING Securities said in a note to clients. It had a 12-month target price for the shares of 180 baht.
Analysts said the market was oversold and the market valuation was already cheap compared to regional bourses, which triggered buying of shares in top industrial conglomerate firm Siam Cement, which climbed 4.72 percent to 222 baht.
The big-cap SET 50 closed 1.07 percent higher at 43.4 points while the benchmark Stock Exchange of Thailand (SET) composite index rose 3.41 points, or 0.53 percent, to 649.21 points.
Turnover remained thin, falling to 12.4 billion baht ($314 million) from 13.8 billion baht on Monday as domestic investors shunned risks ahead of a long-holiday in April while foreign investors slowed their buying, analysts said.
"Our market valuation was already cheap, but still investors didn't want to jump in. They think the market correction this year is small compared to last year's rally," said analyst Chaiyaporn Nompitakcharoen at Bualuang Securities.
The Thai stock market has fallen 15.9 percent so far this year and is Asia's worst performing stock market, according to Reuters 3000 Xtra. Last year, it was the best performing market in the world with a 116 percent rise.
A consensus of analysts showed a price to 2004 forecast earnings ratio for the Thai market of 10-11 times compared to 16-17 times for Malaysia, Chaiyaporn said.
"Turnover was thin as investors were not confident that the rebound would be sustained and they were looking to sell rather than buy," he said.
More bad news from violence plagued southern Thailand, where many of the country's six million Muslims live, would keep the market from rising and the index was likely to move in a range of 655-645 points on Wednesday, Chaiyaporn said.
The 14-day relative strength index (RSI) was at 23.8 at Tuesday's close, up from 18.7 at Monday's close. An RSI level of 30 and below indicates the market is oversold.
Shares in Thailand's largest credit card issuer, Krungthai Card PCL, fell 4.6 percent to 21 baht, their lowest in almost eight months, after the central bank announced measures to rein in the fast-growing credit card industry.
Shares in packaging firm S.Pack & Print PCL fell 19.4 percent to 13.7 baht on their debut from an initial public offering price of 17 baht.