Sri Lanka stocks down 1.5-pct

July 12, 2011 (LBO) – Sri Lanka stocks slumped again Tuesday, dropping 1.54 percent amid continued forced selling with Softlogic Holdings falling below its Initial Public Offer (IPO) price on its trading debut. The main All Share Price Index closed at 6,663.64, down 1.54percent (103.95 points) while the more liquid Milanka index fell 1.76 percent (112.52 points) to close at 6,274.45, according to stock exchange figures.

Turnover was 2.1 billion rupees. There were 46 gainers and 185 losers.

“The market experienced a blood bath for the second day today as well as the brokers decided to strictly enforce the T+5 rule (payment five days after trading) and also decided to strictly comply with margin provider requests to force sell client positions exceeding the stipulated 50 percent,” said Capital Trust Securities Research in a note to investors.

“There is a strong likelihood that this massacre may continue tomorrow as well.

“We should remind everybody again that prudent investors would be entering the market at these relatively low levels to realize significant gains rather than waiting till the market starts pushing all-time highs once again.”

Swarnamahal Financial was the highest percentage gainer for the day and it closed at 90 rupees, up 15.36 rupees or 11.80 percent.

Analysts said Softlogic Holdings (SHL) fell below its issue price. SHL issued 139 million shares at 29 rupees at a public offer. The share fell as low as 16.20 rupees after hitting a high of 25 rupees in early trade.

SHL closed at 18 rupees, down 11.00 rupees or 37.93 percent compared to the IPO price. More that 21 million shares of Softlogic Holdings were traded generating 418 million rupees.

Softlogic Holdings bought a 73.5 percent stake in Asian Alliance Insurance, a listed insurer, for 3,308 million rupees, a stock exchange filing said. Asian Alliance closed at 134.80, down 1.20 rupees or 0.88 percent.

Recent debutant Vallibel One was the second most actively traded stock closing at 30 rupees, up 30 cents or 2.39 percent with 6 million shares done.

Market heavyweight John Keells Holdings fell two rupees or 0.98 percent to close at 203 rupees while Distilleries closed at 178.50, down 1.50 or 0.83 percent.