Sept 23, 2008 (LBO) – Sri Lankan shares weakened further Tuesday on small volumes with brokers saying investors remained concerned about the earnings outlook of listed firms.
The All Share Price Index fell 0.37 percent (8.23 points) to 2,230.95 while the Milanka was barely changed at 2,512.31. Turnover was 101 million.
Brokers said the market is likely to remain in the doldrums in the near term, with the exception of a few speculative transactions, unless there was news which could lift prices.
“Investors are still cautious,” said Geeth Balasuriya of HNB Stockbrokers. “They are wary about the earnings outlook.”
Company earnings have taken a beating in recent quarters with inflation hitting record highs earlier this year and still in double digit levels while borrowing costs remained stubbornly high.
“The overall sentiment is weak,” said Balasuriya. “Unless there’s positive news we do not expect the market to pick up big time in the immediate future.”
Foreign investors also appeared to be holding onto their positions and bargain hunting and not selling despite the turmoil in global financial markets in recent days.
“I do not think our market is reacting to the global financial situation,” said Balasuriya. “We have not seen big foreign selling. In fact, there’s been some foreign buying.”
Dialog Telekom was the most actively traded stock Tuesday with 560,200 shares traded. The stock ended up 25 cents at 9.25 rupees.
The indices had been dragged down in recent days owing to falls in heavyweight stocks like Dialog Telekom, whose earnings have been hit by fierce competition.
Other heavyweights like John Keells Holdings were affected after it lost a key marine fuels business on a court order, while Distilleries has been hit by uncertainty over a legal challenge to the acquisition of its insurance unit.
Equity One, which was heavily traded yesterday, fell sharply Tuesday, the third sharpest decline, down 9.65 percent or 2.75 rupees to 25.75 rupees.