Losses at Bourse balloon to Rs. 142 b

Tuesday, 14 February 2012 00:49 - - {{hitsCtrl.values.hits}}

The loss of value at the Colombo Bourse during the past four market days has ballooned to Rs. 142 billion, whilst the year-to-date negative return was inching towards 15% as misery worsened for investors on account of adverse external developments.

The stock market yesterday within the first hour of opening ran the risk of a crash as the All Share Index plunged by 250 points and Milanka by 150 points. However, a fresh round of buying by bargain hunters helped arrest the slide.

The eventual dip by day’s end was 117 points (2.2%) for ASI and 103 points (2.2%) for MPI. Year-to-date negative return of the ASI was languishing at 14.4%. The market’s value saw an erosion of Rs. 43 billion on top of Rs. 99 billion lost during last week’s three market days.

“The market continued its losing streak with a staggering downturn witnessed in the early part of trading due to the prevailing negative sentiments and also due to margin calls being triggered,” NDB Stockbrokers said.

Despite the dip, the market gradually recovered, with turnover surpassing the Rs. 1 billion mark, it added.

Heavy institutional and high net worth investor interest was seen in Commercial Bank and CTC. The Diversified sector became the highest contributor to the market turnover (due to John Keells Holdings) and the sector index declined by 2.23%. The John Keells share price decreased by Rs. 3.30 (2.02%) to close at Rs. 160.

The Banks, Finance and Insurance sector was the second highest contributor to the market turnover (due to Commercial Bank and Swarnamahal Financial Services) and the sector index came down by 2.49%. The share price of Commercial Bank decreased by Rs. 0.50 (0.50%) to close at Rs. 100.50 while the share price of Swarnamahal Financial Services declined by Rs. 1.20 (0.75%) to close at Rs. 160.90.

Heavy activity was seen in Hotel sector counters such as Citrus Leisure and Asian Hotels and Properties.

SC Securities said the reason for the panic was assumed to be the unexpected magnitude of the hike in certain types of fuel, primarily diesel. Asia Wealth said the prime reason for the dip was the negativities in the economic sphere, which led to panic selling and hefty margin calls.

Arrenga Capital said forced selling on margin calls were exaggerated by the retail panic selling as majority of the stocks were seen trading on their 52-week low.

“We believe several factors including the hike in policy rates and a weakening rupee would also have contributed towards the continuous dip in indices (successive eighth session of losses),” it added.

The continued redeemer for the Colombo Bourse is the fact that foreigners remained net buyers for the fourth consecutive session.