Sri Lanka Stock Picks

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Thursday, August 4, 2011

Stock market calms

■Bourse sees thin turnover, volume

■Global growth downturn could hit post-war earnings – analysts

■Rupee weaker on importer dlr demand, dlr band raise

COLOMBO (Reuters): Sri Lankan bourse fell in thin volume on Wednesday led by retail profit taking amid fears of a further fall due to an expected slowdown in the global economy after the United States passed a spending cut plan to overcome a debt crisis.

Globally, most stock markets were down on Wednesday on concerns over a U.S. tighter fiscal policy that could constrict U.S. growth, as Europe’s debt crisis is still worsening.

“They don’t have a direct impact on our market, but the concern is earnings of most of our companies could be hit as they are depending of the health of the global economy,” a stock broker said on condition of anonymity.

“Tourism, investments, and other export-related sectors could have an adverse impact due to this.” The main share index fell 0.1 percent or 6.99 points weaker to 6,812.59, its second fall after hitting a three-week high on Monday due to hopes over better earnings and the regulator SEC relaxing strict margin trading rules.

The day’s turnover was 1.21 billion Sri Lanka rupees ($11 million), lowest since 25 July and well below last year’s average of 2.4 billion and this year’s 2.7 billion.

Wednesday’s total volume was 72.5 million, lowest since 28 July, against five-day average of 90.5 million. The 30-day and 90-day average trading volumes were 87 million and 108.4 million, respectively. Last year’s daily average was 67.9 million.

Foreign investors were net sellers of 10.7 million rupees worth of shares on Wednesday, extending the outflow to 971.3 million in seven sessions. They have sold 8.63 billion rupees in 2011 after a record outflow of 26.4 billion in 2010. The bourse is up 2.66 percent so far this year, after being Asia’s best performer in 2009 and 2010, after gaining 124 percent and 96 percent respectively due to optimism over the economy after the end of a 25-year war in May 2009.

The rupee ended weaker at 109.64/66 a dollar from Tuesday’s close of 109.59/60 on heavy importer dollar demand, while the Central Bank raised the trading band by 10 cents to 109.10/70, dealers said.

source - www.ft.lk