Sri Lanka stocks fall 4.4-pct

Oct 12, 2010 (LBO) - Sri Lanka's benchmark share index plunged 4.4 percent Tuesday wiping out 95 billion rupees off stock values in a steep correction amid some margin calls on retail investors brokers said.

The Colombo All Share Index fell 300.59 points to 6,534.02 points while the Milanka Index of liquid stocks fell 333.28 points or 4.54 percent, according to Colombo Stock Exchange data.

Stocks fell across the board with mainly retail selling.

"There is selling pressure but not widespread institutional selling," Nikita Tissera, research manager at SC Securities said.

"Retailer are being hit by margin calls."

Sri Lanka's securities watchdog asked brokers to limit margin limits to 50 percent by January one and in a falling market margin calls can trigger selling.

Foreign investors have also been on the sell side this year.

Tuesday's 4.4 percent fall is the biggest decline in 21 months, when the index fell 4.98 percent on January 21, 2009, according to Bloomberg newswires data.

But a correction had been expected after stocks rose 110 percent from January making Sri Lanka the best performing market in the world.

The index is now down 8.5 percent from an October 01 peak of 7,147 points. Sri Lanka is still the second best performing market up 93 percent so far this year, behind Mongolia which is up 109 percent.

Most investors are sitting on large capital gains and are in a position to sell, and following large bull runs corrections of 20 percent or more are not unusual, analyst say.

Meanwhile there are also investors who missed out on the run to buy when prices fall, brokers said.

Among large cap firms, Aitken Spence fell 11.60 rupees to 204.60, Dialog Axiata fell 70 cents to 12.00, John Keells Holdings fell 11.90 to 313.60, Carsons Cumberbatch 36.40 to 863.40 and Distilleries 5.50 to 171.00.

Commercial Bank fell 11.90 to 260.20 rupees, Hatton National Bank fell 11.80 to 216.20, Sampath Bank 17.70 to 243.10 rupees and Central Finance fell 51.40 to 772.00.

Diesel & Motor Engineering fell 40.60 to 907.60, United Mortors fell 23.90 to 218.20 and Sathosa Motors 23.30 to 183.60 rupees.

Ceylon Tea Services closed up 93.30 at 893.30, Colombo Investment Trust rose 2.00 rupees to 174.00, Colombo Pharmacy rose 39.90 to 1,664.20, Printcare rose 90 cents to 90.10 and Samson International rose 80 cents to 102.00 and Autodrome rose 99.90 to 649.90.

source - www.lbo.lk