Sri Lankan stocks slide on forced selling

Nov 10, 2009 (LBO) – Sri Lankan shares closed down Tuesday mainly on forced selling by retail investors trying to meet settlement commitments and minimize losses in margin trading on borrowed funds, brokers said. Political uncertainties generated by talk of elections and continued media coverage of alleged insider dealing by US hedge fund manager Raj Rajaratnam who owns big stakes in a few local firms dampened market sentiments, they said.

The All Share Price Index closed down 0.83 percent (23.92 points) to end at 2,843.66, while the Milanka Index of more liquid stocks lost 0.53 percent (17.11 points) to close at 3,198.09, according to provisional stock exchange data.

Turnover was 828.5 million rupees.

“The market has not recovered from the forced selling,” Nikita Tissera, research manager at SC Securities, a stock brokering firm, said.

“Uncertainties regarding the socio-political events in the country and the Raj Rajaratnam case continued to dampen investor sentiments.”

Conglomerate John Keells Holdings (JKH) closed flat at 137.00 rupees with over 3.3 million shares changing hands, and Distilleries Company of Sri Lanka closed at 90.25 rupees, up 25 cents.

Brokers said investors panicked when large volumes of JKH and Commercial Bank shares changed hands fearing Rajaratnam was liquidating his stakes in the Colombo bourse.

Commercial Bank of Ceylon closed at 168.50 rupees, down 50 cents, and Hatton National Bank closed at 158.00 rupees, up 3.00 on thin volume trading.

National Development Bank closed at 170.00 rupees, down 5.00, and Sampath Bank closed at 174.00 rupees, down 1.00.

Retailer favorites Lanka Cement closed at 24.00 rupees, down 75 cents, and Touchwood Investment closed at 79.25 rupees, down 75 cents.

Construction sector stocks, ACL Cables closed at 66.00 rupees, down 2.00, and Kelani Cables closed at 149.50 rupees, down 5.00.

In the leisure sector, Kandy Hotels closed at 98.00 rupees, down 2.00, Hotel Sigiriya at 48.00 rupees, down 75 cents, Asian Hotels and Properties at 69.00 rupees, down 1.00 and The Lighthouse Hotel at 66.50 rupees, down 2.50.

Index heavy celco Dialog closed at 6.75 rupees, down 25 cents, and Sri Lanka Telecom closed at 41.50 rupees, down 1.25.

Meanwhile the Colombo Stock Exchange said it plans to admit up to five new trading members to the CSE in the first half of 2010.

The CSE currently has 15 members and six trading members licensed to trade in both equity and debt.