Bourse in free fall to three month low

•  Retail selling continues as 6 bln rupee cash locked in IPOs
• Rupee down on importer dlr demand-dealers

COLOMBO (Reuters): Sri Lanka’s stock market fell on Tuesday to a fresh three-month closing low on retail investor selling on low liquidity after two large initial public offerings while the rupee edged down on importer dollar demand.

Sri Lanka’s main share index closed 1.44 percent or 103.81 points weaker at 7,083.05, its lowest since 15 March.  Over 6 billion rupees of cash has been locked in the recent IPOs by conglomerate ExpoLanka Holdings, which started trading on Monday, and Softlogic Holdings, which is yet to start trading on the stock exchange, bourse data showed.     

“Sustained selling pressure across the board dragged the indices lower while improved foreign participation supported activity levels,” JK Stockbrokers said in a research note.

Foreign investors were net buyers of 625.6 million rupees worth of shares on Tuesday, but they have sold a net 6.32 billion rupees worth shares in 2011 after a record 26.4 billion in 2010.

On Tuesday, diversified firm Softlogic, which offered the largest IPO in six years, informed the bourse its offer has been oversubscribed by over 300 percent.

 The day’s turnover was 4.13 billion Sri Lanka rupees ($37.7 million), well over last year’s average of 2.4 billion and this year’s daily average of 2.93 billion.

Traded volume was 235.3 million, against a five-day average of 290.6 million. The 30-day and 90-day average trading volumes were 168.4 million and 104.3 million, respectively. Last year’s

daily average was 67.9 million.

The bourse is still Asia’s best performer in 2011 with a 6.7 percent gain, after bringing in the region’s top return of 96 percent last year.

The rupee closed weaker at 109.55/58 a dollar from Monday’s 109.45/48 due to importer dollar demand, currency dealers said. It hit a high of 109.30 a dollar on Thursday, its highest since 30 October, 2008, Reuters data showed.

Stock and foreign exchange markets will be closed on Wednesday to mark a Buddhist religious holiday and normal trading will resume on Thursday.

Expolanka slips but draw heavy foreign buying

This week’s debutant Expolanka Holdings yesterday saw its share price dip by Rs. 1.40 to Rs. 13 in tandem with market’s free fall but over 65% of the quantity traded was bought by foreign investors.

On its second day of trading 27.5 million shares of Expolanka changed hands for Rs. 380.1 million, accounting for the second highest contribution for the turnover. Of the quantity traded was a crossing of 10 million shares at Rs. 14 each whilst overall 18 million shares or 65.4% were bought by foreign investors. Its rank in market cap dipped to 23rd from 19th but the overall quantity traded was lower in comparison to Monday's 31.6 million. The market yesterday fell by 1.4% to a three month low as retail investors began selling out despite losing money.