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Friday, August 6, 2010

CSE up after fall

Steep drop in early trading but later pick-up

New regulatory measures pushes stock market down

"The market lost nearly 200 points when trading began but picked up later with bargain hunters moving in," Prashan Fernando of Acuity Stockbrokers said.

On Wednesday evening, after the market closed, the SEC announced the lifting of the trade halts imposed on some speculative stocks and also directed that a price band of 10% (up and down) be imposed on share price movements with some exceptions specified.

These included the first day of trading in any security, all or nothing parcels, a crossing, debentures and securities where the previous closing price was below Re. 1.

Only day orders will be permitted in the future in accordance with the SEC directive.

Most brokers believed that these measures were a market depressant with a lot of red seen on the trading boards yesterday.

They said that although turnover at Rs.1.9 billion was satisfactory, this was far below the much higher levels seen in the recent past.

Environment Resources Investments (ERI) where no trade halt was imposed on the share, although trading in its warrants were halted, was the day’s biggest turnover generator with nearly 1.6 million shares traded between Rs.113 and Rs.128 losing 10.20 to close at Rs.114 contributing Rs.184.1 million to the day’s business volume.

JKH followed with over 0.6 million shares done between Rs.250 and Rs.260 declining Rs.2.20 to close at Rs.228.90 and Touchwood with 3.7 million shares done between Rs.36.50 and Rs.39.90 losing Rs.3.60 to close at Rs.36.60.

With few exceptions like NTB, DFCC and Keells Hotels (KHL), nearly all stocks that were major contributors to yesterday’s turnover saw price declines. KHL was up a modest 10 cents, DFCC up Rs.2.10 and NTB 10 cents.

High volumes were demonstrated by Asia Capital (over 2.3 million), two ERI warrants (nearly 1.2 million and 1.1 million), Odel (over 2 million) and Dialog (nearly 6.1 million).

Losers strongly outpaced gainers by 146 to 27 according to CSE figures.

Some investors, while agreeing there had been market volatility in recent weeks with speculative trading taking some shares to unrealistic highs expressed the view that regulation was a damper.

The PC House share issue was heavily over-subscribed when it opened yesterday and was closed at 4.30 p.m. last evening.

source - www.island.lk