Sri Lanka Stock Picks

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Thursday, June 16, 2011

Sri Lanka bourse hits 5-mo closing low; rupee down

* Shares at 5-mo low on retail margin sales amid low liquidity after two IPOs

* Foreigners buy 73.7 mln rupees worth shares on net basis

* Rupee down on importer dlr demand-dealers

COLOMBO, June 16 (Reuters) - Sri Lanka's stock market fell on Thursday to a five-month closing low on margin calls that forced retail investors to sell their stakes to settle credit transactions amid low liquidity while the rupee edged down on importer dollar demand. Sri Lanka's main share index ended 0.95 percent or
67.34 points weaker at 7,015.71, its lowest since January 17.

It recovered from 1.42 percent fall early in the day. Over 6 billion rupees of cash has been locked in the recent IPOs by conglomerate ExpoLanka Holdings , which started trading on Monday, and Softlogic Holdings, which is yet to start trading on the stock exchange, bourse data showed. Foreign investors were net buyers of 73.7 million rupees worth of shares on Thursday, but they have sold a net 6.25 billion rupees shares in 2011 after a record 26.4 billion in 2010. On Tuesday, diversified firm Softlogic, which offered the largest IPO in six years, informed the bourse its offer has been oversubscribed by over 300 percent.

The day's turnover was 2.37 billion Sri Lanka rupees ($21.6 million), in line with last year's average of 2.4 billion but below this year's daily average of 2.93 billion.

Traded volume was 186.7 million, against a five-day average of 278.1 million. The 30-day and 90-day average trading volumes were 172.9 million and 105 million, respectively. Last year's daily average was 67.9 million. The bourse is still Asia's best performer in 2011 with a 5.7 percent gain, after bringing in the region's top return of 96 percent last year.

The rupee closed weaker at 109.57/60 a dollar from Tuesday's 109.55/58 due to importer dollar demand, currency dealers said. It hit a high of 109.30 a dollar on June 9, its highest since Oct. 30, 2008, Reuters data showed. Stock and foreign exchange markets were closed for a holiday on Wednesday .
FACTORS TO WATCH:

- Investor response for cenbank's steady monetary policy rates announced on Tuesday

- If foreign investors buy shares in large volumes

- If Sri Lanka can achieve an 8.5 pct growth target amid rising global oil prices and inflation

- The extent of the rupee appreciation
source - www.reuters.com