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Friday, June 24, 2011

What’s next for CSE?

All Share Index crashes below 200 Day Moving Average

By Jithendra Antonio

Two years after its star performance as the world’s leading stock market, the Colombo All Share Price Index crashed below its 200 Day Moving Average yesterday for the first time since it rose above it on 18, May 2009, when Sri Lankan armed forces gained victory defeating LTTE terrorists.

“It is hard to predict what would be the next movement of stocks, but technically the next support level is at 6700 points,” Head of Frontier Capital Partners Nishan Sumanadeera told Mirror Business. He said that Sri Lanka’s stock prices had been stretched in recent months. “Yesterday’s crash technically symbolizes that 200 Moving Day Average Chart has fallen back since it rose upwards on 18 May 2009.”

“Technical analysis show that it last fell when oil prices zoomed over $ 140 per barrel in 2008, on the verge of world’s second financial crisis,” Sumanadeera noted.

He further pointed out that as per technicalities, it is a very bearish signal for share prices as the 200 Day Moving Average is considered a key support resistance indicator by Technical Analysts and Chartists with regard to long term trends and direction of share prices.

According to him, brewing debt crises in Portugal, Ireland, Italy, Greece and Spain in the Euro Zone, and the slump in US stock markets may also affect the Colombo Bourse.

Colombo’s All Share Price Index closed at 6,871.68 points, down by 56.06 points and the Milanka Price Index fell by 79.56 points to close at 6,436.90 on Thursday.,

After the end of the Civil War on 18th May 2009, Colombo stocks jumped drastically, setting new records among global emerging markets. The market capitalization of CSE reached record high on 06th October 2009 (Rs. 1 trillion). However, within last year, the market capitalization reached further to Rs.2 trillion, and return on capital rose to 96%. Yesterday’s performance reflected that year-to-date performance is just little over 3% this year.

source - www.dailymirror.lk