Stock market falls as fast as recent rise

• Price indices plunge by 3% fastest drop since February
•  Slide increased the ASPI losses by 571 points since peak and S&P by 200 points
• Rs. 255 b in value wiped off since all-time high
• Profit taking and panic selling influenced by macroeconomic worries, CB currency move
• Brokers advise clients to accumulate fundamentally strong stocks
• Capital Trust claims no structural reasons, whether on a macroeconomic level or at a company level, to justify the current sell off

The Colombo stock market yesterday suffered the biggest drop in recent months as investors continued to book profit after record highs, though panic selling was evident on concerns over the Central Bank's currency move.

The All Share Price Index plunged by 3.6%, or 328 points, and the S&P SL20 was down by 3% or 102 points.

Since all-time high levels as of 3 September, the ASPI has dipped by 571 points and S&P SL20 by nearly 200 points. The market has lost Rs. 255 billion in value, with yesterday's market capitalisation Rs. 3.905 trillion as opposed to Rs. 4.160 trillion last Friday.

However, year-to-date (YTD) it is up 32%, while the ASPI is 29%, and S&P SL20 higher by 25%.

It was the recent biggest gainers who contributed most to the ASPI's dip yesterday, as well as this week so far. Expolanka contributed 55 points, LOLC (54 points), Browns Investments (39 points), Commercial Leasing (23 points) and Hayleys (16 points).

Asia Securities said the market extended losses for the fourth consecutive session as the indices moved downwards for most of the trading session, but ended trading on a stronger note owing to a sharp late-hour recovery. 

The ASPI witnessed its biggest drop since February and eventually closed at a two-week low, mainly led by price declines in EXPO, LOLC, and BIL, which collectively contributed 148 negative points to the index. 

“The breadth of the market remained negative due to a broad-based selling, which resulted in price losses in 184 stocks compared to price gains in 24 stocks,” Asia said. 

It said the ASPI touched an intra-day low of 8,661 before witnessing a brief period of respite in the last hour of trading in which the index garnered 103 points as investors switched back to position themselves in oversold counters. 

Capital Trust Securities mid-day advised its clients to use the current market weakness to accumulate fundamentally strong stocks. This is because it believed that there were no structural reasons, whether on a macroeconomic level or at a company level, to justify the current sell off. It also said that while yesterday’s decline was mainly due to broad selling by retail investors, it was important to note that major shareholders continued to hold their stakes, or even increased their stakes, reflecting strong confidence in the stocks they had invested in.

Turnover yesterday was high at Rs. 10.5 billion with 489.7 million shares traded.

First Capital said the bourse constantly ended up closing in red territory for four consecutive days as macroeconomic worries and concerns of market overheating rose, despite high turnover.

“The index recorded the largest single day point decline of 328 points for seven months and rushed to reach an intraday low of 8,651 in the mid-day. Besides that, the index crashed by 572 points since the all-time high closing and took a mild rise towards the end of the session by closing at 8,764,” First Capital said.

It said turnover was led by the Transportation sector, followed by the Food, Beverage and Tobacco sector, collectively accounting for a total contribution of 57%.

NDB Securities said high net worth and institutional investor participation was noted in Hatton National Bank non-voting. Mixed interest was observed in Expolanka Holdings, LOLC Holdings and Hayleys, while retail interest was noted in Browns Investments, Nation Lanka Finance and SMB Leasing non-voting. Foreign participation in the market activity remained at subdued levels with foreigners closing as net sellers.

The Transportation sector was the top contributor to the market turnover (due to Expolanka Holdings), while the sector index lost 6.79%. The share price of Expolanka Holdings decreased by Rs. 12.50 (6.81%) to close at Rs. 171.

The Food, Beverage and Tobacco sector was the second highest contributor to the market turnover (due to Browns Investments), while the sector index decreased by 3.13%. The share price of Browns Investments lost Rs. 1.20 (11.54%) to close at Rs. 9.20.

Hatton National Bank non-voting, LOLC Holdings and Hayleys were also included amongst the top turnover contributors. The share price of Hatton National Bank non-voting closed flat at Rs. 130. The share price of LOLC Holdings recorded a loss of Rs. 50.50 (8.54%) to close at Rs. 541. The share price of Hayleys declined by Rs. 9.50 (8.43%) to close at Rs. 103.25.

Separately, Carson Cumberbatch announced an interim dividend of Rs. 1.50 per share.