Sri Lanka stocks lose momentum

Jan 24, 2008 (LBO) — Sri Lanka stocks closed lower Thursday losing some of the gains made a day earlier after a hideout of Tamil Tiger leader Vellupillai Prabhakharan was bombed. The All Share Index closed 0.64 percent lower, falling 15.68 points to 2,436.71 and the liquid Milanka index closed 0.78 percent or 24.61 points lower at 3,126.07 as traders waited for news that could improve sentiment.

Turnover was 118 million rupees.

“We are not expecting too much positive news from fourth quarter earnings,” a stockbroker said.

“We have already seen things slowing down. But people are waiting for news that can boost sentiment such as military gains.”

The market shot up Wednesday after reports of an air strike on a Tamil Tiger bunker in the north where its leader, Prabhakaran, was believed to have been hiding.

But the momentum was not sustained owing to the absence of any conclusive news on the fate of the Tiger chief.

“The market is highly vulnerable to political developments so any positive developments will boost the market because of the attractiveness of certain stocks,” said Angelo Ranasinghe, Head of Research at Bartleet Mallory Stock Brokers.

The market has been falling steadily in recent months and brokers said some shares were looking attractive although earnings are seen falling because of difficult economic and political conditions.

“Buying interest has been very selective and limited and the trend has been downward,” said a broker. “But there are opportunities in the market.”

Brokers said that while local investors are waiting for positive developments, foreign investors have been net buyers in the past two months accounting for over half the daily turnover on average.

So far only the John Keells Holdings group and Autodrome, a tyre trading firm, have released results and the big index heavy telcos, banks and conglomerates are yet to released earnings.

On Thursday Sri Lanka Telecom closed 50 cents lower at 31.00, Dialog down 0.25 cents at 18.25 cents.

Lanka Cement shares, which shot up over 50 percent or four rupees to 11.75, Wednesday, on speculation over a deal with India’s Birla group, fell Thursday.

The stock closed at 11 rupees, down 75 cents, on the volume weighted average, with 705,500 shares changing hands.

Meanwhile, the rupee traded at 107.80/85. .