Stock market plunges by over 3% due to erratic illiquid heavyweights

• ASPI suffers biggest day crash in 9 months
• Low-float LOLC Group companies’ biggest contributors to the fall
• Expolanka Holdings regains most valued status

The Colombo stock market suffered one of the sharpest dips in nine months, partly due to profit taking and anomaly in illiquid but heavyweights whilst turnover remained high.

The All Share Price Index plunged by 3.3% or 366 points whilst the more active S&P SL20 gained 22 points or 0.6%. Turnover was Rs. 9.4 billion involving 322 million shares. During the week, the ASPI lost 0.07% whilst the S&P SL20 gained 1.62% and average daily turnover was Rs. 9.2 billion.

LOLC Group stocks Commercial Leasing contributed 214 points to ASPI;s dip followed by LOFC (134 points), NIFL (24 points) BIL (10 points).

LOFC was the biggest loser in percentage wise – down 30.6% to Rs. 25.80 though it topped in terms of turnover of Rs. 2.8 billion with 91.2 million shares changing hands via 15,936 trades. It touched an intra-day high of Rs. 36. The negative contributions of LOLC group companies to ASPI was despite the parent announcing further steps towards creating a mega platform to attract large foreign investors to its finance companies.

Asia Securities said driven by a massive plunge in low-float illiquid stocks, the ASPI ended the last trading session of the week on a negative note witnessing its biggest single-day fall (366 points) since 02 February while the more liquid S&P SL20 index advanced more than one percent on the back of price gains in JKH and EXPO.

It said sharp price declines in these stocks collectively contributed 384 negative points to the index, however the market moved with positive bias throughout the session as investors’ appetite for fundamentally strong stocks remained unchanged.

Importantly unlike previous falls, yesterday’s plunge did not trigger a broad-based panic selling, and neither did weigh on buying activity as investors were aware the plunge at the core was due to high-momentum volatile stocks.

EXPO surpassed the market capitalisation of CLC to become the most valuable company listed on the Exchange with a market cap of Rs. 449 billion. Turnover continued at stronger levels coming in at Rs. 9,394 millon on the back of retail and HNI activity in LOFC and EXPO while market breadth remained negative with 79 gainers and 132 decliners.

According to Asia, foreigners recorded a net outflow of Rs. 500.7 million while their participation declined to 4.0% of turnover (previous day 5.4%). Net foreign buying topped in JKH at Rs. 29 million and foreign selling topped in LLUB at Rs. 489 million.

First Capital said the bourse slid back and ended the week in the negative territory, snapping the previous three-day gain while recording its lowest intraday loss in nine and half months as macroeconomic worries and concerns of market overheating rose.

“The Index displayed significant volatility throughout the session, gaining a few points during the first 30 minutes and subsequently plumped down to reach an intraday low of 10,619 towards the end. As selling pressure emerged by mid-day, investors chose to book profits and adopt a cautious stance after the index breached the psychological level of 11,000 and led the market to close at 10,659, losing 366 points,” First Capital added.

It said turnover was led by a joint contribution of 57% from Diversified Financial and Capital Goods sectors.

NDB Securities said high net worth and institutional investor participation was noted in Chevron Lubricants and Alumex. Mixed interest was observed in Expolanka Holdings, LOLC Holdings and whilst retail interest was noted in Lanka Orix Finance, Browns Investments and Sierra Cables.

Diversified Financials sector was the top contributor to the market turnover (due to Lanka Orix Finance) whilst the sector index lost 11.96%.

The Capital Goods sector was the second highest contributor to the market turnover (due to Sierra Cables) whilst the sector index increased by 1.08%. The share price of Sierra Cables appreciated by Rs. 2.20 (20.18%) to close at Rs. 13.10.

Expolanka Holdings, Browns Investments and Chevron Lubricants were also included amongst the top turnover contributors. The share price of Expolanka Holdings gained Rs. 3 (1.32%) to close at Rs. 229.75. The share price of Browns Investments moved down by 30 cents (2.68%) to close at Rs. 10.90. The share price of Chevron Lubricants recorded a loss of 50 cents (0.47%) to close at Rs. 105.50.

Separately CT Holdings, Cargills and Asia Siyaka Commodities announced their interim dividends of Rs. 1.55, Rs. 2 and 10 cents per share respectively.