Oct 07, 2010 (LBO) – Sri Lankan shares closed lower Thursday, down for the fourth straight day, after a roller-coaster ride that saw the market plunge steeply on opening, bounce back and then fall on profit-taking, brokers said. The All Share Price Index closed at 6,770.74, down 1.34 percent (91.93 points) while the more liquid Milanka index fell 1.44 percent (108.02) to close at 7,412.94, according to stock exchange provisional figures.
Turnover was 2.6 billion rupees.
Brown & Company was the most traded stocks with three private deals at 250-255 rupees a share. The share closed at 253.30, down 5.10 rupees.
“I believe what we see here is a profit-taking glitch. We’ve seen quite a few of those on the ASPI’s rise to 7,000,” said Nikita Tissera, manager research at SC Securities.
“No market growth is ever linear.”
The Colombo Stock Exchange became the best performing market in the world last Friday, having doubled over the past year, amid fears of a stock market bubble.
Tissera said he does not believe the CSE is a bubble.
“It’s just that the trailing multiples have been more expensive than what we have been used to. I believe we have a historical PER (price:earnings ratio) of about 28x,” he said.
“Market PER is heavily distorted by some companies which are retailer favorites and have their PERs at dizzy highs.
“We still have plenty undervalued companies with sound fundamental backing, worthy of investor attention. They are just not as cheap as they used to be.”
John Keells Holdings was also heavily traded Thursday, closing at 325 rupees, down five rupes, as was Commercial Bank which closed at 271.40 rupees, down 2.50 rupees.
Colombo Pharmacy was the day’s biggest loser, plunging 19 percent or 382.90 rupees to close at 1,607 rupees in thin trade.
Citizens Development Business Finance (CDB), which started trading on Wednesday, also fell heavily, down 18 percent or 17.10 rupees to close at 75.60 rupees, after opening at 60 rupees and hitting a high of 90 rupees.
(Editor’s note: Trailing P/E is the sum of a company’s price-to-earnings, calculated by taking the current stock price and dividing it by the earnings per share for the past 12 months.)