Big fall as Rs. 51 b in value lost in Bourse

In its biggest fall in recent months the Colombo Bourse lost a whopping Rs. 51 billion in value yesterday sending shivers across the market.

The benchmark ASI dipped by over 2% or 144 points and MPI by 1.76% or 112 points but turnover was respectable Rs. 1.8 billion.

Yesterday’s dip saw year to date return of ASI being reduced to below 2% with Asia’s best performer tag long lost. Market capitalisation amounted to Rs. 2,378 billion down by Rs. 51 billion from Friday’s figure of Rs. 2,429 billion.

“It was a free fall starting with some of the second tier stocks followed by blue chips,” a broker said. Another added that investors mindset was that market will continue to fall hence selling out on the slide booking whatever profit.  

             “The indices fell sharply on heavy selling pressure across the board driven by mostly retail participation,” observed John Keells Stock Brokers.

“Prices saw a free fall amidst forced and panic selling. Price depreciation of John Keells Holdings and Lanka Orix Finance Company weighed on indices heavily,” NDB Stockbrokers pointed out.

Diversified sector was the main contributor to the market turnover (due to Vallibel One), while the sector index decreased by 2.03%. The share price of Vallibel One decreased by Rs.1.40 (4.56%) and closed at Rs.29.30. Trans Asia Hotels was the main contributor to the market turnover. The share price decreased by Rs 10 (10.75%) and closed at Rs 85.

Bank, Finance and Insurance sector also contributed significantly to the market turnover (due to Swarnamahal Finance). The sector index decreased 2.25%. Accumulation was witnessed in Distilleries while interest continued in Orient Garments. Renewed interest was witnessed in Seylan Bank (Both Voting and Non- Voting), NDB added.

Lanka Securities said the bourse displayed a significant setback today with heavy losses in both indices. Furthermore all the sectors in the market recorded notable losses during trading.

 Foreign participation was 7.4% of the total market activity. At the end of the day foreign investors were the net sellers with a net foreign outflow of Rs.2.7mn.Price depreciation in index heavy counters such as John Keells Holdings Plc (down Rs.5.10), Sri Lanka Telecom Plc (down Rs.0.60) and Commercial Bank Plc (down Rs.4.00) hampered the overall market performances.

Reuters said stocks fell over 2 percent to a six-month low on Monday as margin calls forced sales to settle credit transactions amid low liquidity with large amounts of money locked in private placements and public issues.

Sri Lanka’s main share index fell 2.1 percent or 144.39 points to 6,767.6, its lowest close since January 5 and its highest daily fall since March 3 in terms of both percentage and points.

“Brokers were selling as some investors’ portfolio have come down sharply in the recent weeks,” a stockbroker said on condition of anonymity.

Investors are still allowed to buy on credit depending on their portfolio. But when their portfolio value declines due to an overall market drop, brokers sell their shares even at a low price to recover credits, brokers said.

Market heavyweight and Sri Lanka’s top conglomerate John Keells Holdings fell 2.4 percent, while diversified firm Hayleys closed 4 percent weaker.

Since June 1, the index has shed 8.39 percent, mainly due to forced selling in line with the policy of the regulator Securities and Exchange Commission (SEC) to recover credits, aiming to eliminate all credit dealing by end 2011.

The SEC also has said there may be over 30 billion rupees of liquidity locked in private placements and initial public offerings since February this year.

The bourse is down 0.85 percent so far this year. It was the top performer in the Asia-Pacific region in 2010 and 2009 with 96 percent and 125 percent returns, respectively.

The day’s turnover was 1.88 billion Sri Lanka rupees ($17.2 million), well below last year’s average of 2.4 billion and this year’s daily average of 2.78 billion.

Net foreign outflow stood at 2.7 million rupees on Monday, and offshore investors have sold 7.31 billion rupees in 2011 after a record outflow of  26.4 billion in 2010.

Traded volume was 89.3 million, against a five-day average of 71.5 million. The 30-day and 90-day average trading volumes were 169.2 million and 104 million, respectively. Last year’s daily average was 67.9 million.

Meanwhile the rupee ended steady at 109.49/50 a dollar as a state bank, through which the central bank usually directs the market, defended the currency by selling the greenback at 109.50 despite heavy importer demand, dealers said.