Monday, November 29, 2010

Sri Lanka shares down 2 pct on forced selling

COLOMBO, Nov 29 (Reuters) - Sri Lanka's share market plummeted 2 percent to a more than two-month low on Monday as stockbrokers began issuing margin calls in response to a directive by the regulator, analysts said.

The main share index fell 124.06 points or 1.94 percent to 6,257.01 its lowest since Sept. 15. Asia's best
performer in 2010, with a 84.8 percent gain, has fallen 13.2 percent since hitting a record high on Oct. 4, mainly due to a lack of credit in the market.

After the market closed, the Securities and Exchange Commission said it had extended the deadline for total credit recovery by six months until June 31.

The bourse is trading at a forward price-to-earnings ratio of 20.1 compared with all-Asia's 13.2 and global emerging market's 12.3, Thomson Reuters StarMine data showed. The CSE's 14-day relative strength index is at 31.9, close to the lower neutral limit of 30.

The bourse saw trading volume of 79.7 million shares on Monday, higher than average trading volume of 56.5 million and 44.3 million in the past five days and 30 days respectively. The 90-day average volume of bourse is at 70.7 million.

Foreign investors have sold a net 26.6 billion rupees in shares this year, but on Monday bought a net 675.5 million rupees. Turnover was 2 billion rupees ($17.9 million), more than three times the 2009 daily average of 593.6 million rupees.

The rupee edged up to 111.45/48 a dollar from Friday's 111.50/52 on dollar sales by banks on hopes of the rupee further appreciating after the central bank relaxed strict foreign exchange controls, currency dealers said.


  • New IPOs from firms in which government has a stake, as revealed by the central bank governor.
  • If budget proposals encourage more IPOs, share trading
  • Whether forex control relaxation will attract more foreign buying in shares or corporate debentures
  • Extent of the rupee's rise and how the central bank might ease appreciation pressure 
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