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Saturday, June 25, 2011

Stock market recovers from lows; concerns remain

■ Telcos, diversified shares help boost index

■ Rs. 136.4 m net foreign selling

■ Rupee steady again on state bank’s dollar sales

COLOMBO (Reuters): Sri Lankan stocks rebounded on Friday from a five-and-half month closing low, snapping a four-session fall on gaining telecom and diversified shares, but concerns over margin calls that forced selling and low liquidity remained.

Sri Lanka’s main share index edged up 0.3 percent or 20.88 points, to 6,892.56, from its lowest since 6 January, Reuters data showed.

It had shed about 7 percent in June alone and 2.2 percent this week, but is up 3.87 percent so far this year.

“The indices edged higher on renewed buying amid moderate turnover levels. Speculative trading on second tier counters continued to be evident,” John Keells Stockbrokers said in a note.

Analysts said the index could dip to 6,500, once it falls below the next support level of 6,800 points.        The Colombo bourse was the Asia Pacific’s top performer in 2010 and 2009 with 96 percent and 125 percent returns respectively.

Analysts said forced selling by brokers has been continuing in line with the policy of the regulator Securities and Exchange Commission (SEC) to recover credits, while over 6 billion rupees has been locked up in the two recent initial public offerings.

Foreign investors were net sellers of 136.4 million rupees worth of shares on Friday and have sold a net 6.4 billion rupees in 2011 after a record 26.4 billion in 2010.

The day’s turnover was 1.89 billion Sri Lanka rupees ($17.2 million), well below last year’s average of 2.4 billion and this year’s daily average of 2.88 billion.

Traded volume was 129.8 million, against a five-day average of 121.9 million. The 30-day and 90-day average trading volumes were 187.1 million and 106.5 million, respectively. Last year’s daily average was 67.9 million.

The rupee closed unchanged for a second day at 109.58/60 a dollar as a state bank, through which the Central Bank directs the market, sold dollars at 109.60 rupees despite heavy importer demand for the greenback, dealers said.

source - www.ft.lk