Oct 10, 2010 (LBO) - Sri Lanka’s benchmark share index plunged 4.4 percent Tuesday wiping out 95 billion rupees in 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.
But a correction had been expected after stocks rose 110 percent by end September from January making Sri Lanka the best performing market in the world.
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.
source - www.island.lk
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