Stocks slip on profit-taking ahead of SEC ruling

COLOMBO (Reuters): Sri Lanka’s share market fell on Friday as retail investors booked profits in high-volume trade, preparing for a possible rally after the Securities and Exchange Commission (SEC) announces its decision on relaxing credit restrictions.

The SEC has said that on Monday it will make a final decision on broker requests to allow more lending to clients for share purchases. The stock market is closed on Monday in lieu of a Hindu holiday on Sunday.

The main share index ended 0.22 per cent, or 13.13 points weaker at 5,929.34, erasing gains from early trading. It rose 0.85 per cent or 50.73 points during the day as retail investors snapped up shares on speculation.

Environmental Resources Investment PLC, a favourite of retail speculators, fell 2.03 per cent to 33.70 rupees after having risen 27.21 per cent in the two previous sessions.

Commercial Bank of Ceylon PLC, which saw foreign selling of 573,000 shares on Friday, fell 0.2 per cent to 100.10 rupees.

The day’s turnover was Rs. 1.2 billion ($10.54 million), highest since 5 December, but far below last year’s average of Rs. 2.3 billion. Volume was 85.7 million shares, highest since 1 December. Last year’s daily average was a record 102.7 million.

The Colombo bourse is the third-worst performer among Asian countries in 2012 with a 2.39 per cent loss so far. Only Pakistan’s market and China’s Shenzhen Class A Share index for domestic investors have fared worse.

Foreign investors were net sellers of 60.4 million rupees worth of shares, extending the year-to-date foreign outflow to 347.5 million after 19.1 billion in 2011.

The index lost 8.5 per cent in 2011 and was Asia’s 10th-best performer after being top in the region until June. It was Asia’s best in 2009 and 2010.

The rupee closed flat at 113.89/90 to the dollar for a 37th straight session since a three per cent devaluation effective 21 November, with the Central Bank selling around $ 17 million to defend it, dealers said.