Reuters: The Colombo stock market fell 4.4 percent on Thursday, in the biggest-ever absolute one-day fall, as retail investors sold into a correction in Asia's best performing and most expensive market this year, analysts said. Sri Lanka's main share index closed 300.59 points or 4.4 percent weaker at 6,534.02, hitting its lowest since Sept. 20. It is the highest absolute fall in the island nation's bourse ever, and the highest percentage fall since Jan. 21 last year, Thomson Reuters data showed.
It is still Asia's best performer in 2010 with a 93 percent gain as the island's economy rebuilds following the end of the civil war in May last year. It has shed more than 9 percent since hitting an all-time high of 7,207.75 on Oct 4. "A bit of panic selling and profit-taking was there," said a stockbroker asking not to be named. "Some investors are raising funds for upcoming IPOs and some others sold shares to settle their credit transactions."
Analysts said the bourse was due for a correction after a more than a 20 percent rise in September alone and ahead of the release of third quarter earnings, which are due to start this week. The index is in a neutral region since Oct. 6 after being in an overbought zone from Aug. 18 with the 14-day relative strength index (RSI) at 50.8, middle of the neutral limits of 30 and 70, Thomson Reuters data showed. The index was at 92.4 on Oct. 1.
Sri Lanka's share index is trading at the highest forward price-to-earnings ratio in Asia and global emerging markets at 21.2 times, compared with 13.3 for all of Asia and 12.4 for global emerging markets, Thomson Reuters data showed.
Market turnover was 3 billion rupees ($27.3 million), more than five times the 2009 average. Foreign investors sold a net
source - www.dailymirror.lk
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