Stocks fall amid profit-taking in overbought market

Thursday, 20 September 2012 01:06 - - {{hitsCtrl.values.hits}}

Reuters: Stocks fell 1.4 per cent yesterday as investors booked profits across the board in an overbought market after a 15-session rally.

The Colombo Stock Exchange’s main index, which fell 2.2 per cent in early trade, recouped its early losses to end 1.04 per cent, or 61.67 points, weaker at 5,849.14.

“We are going to see a lot of volatility. But foreign buying can give an extended life to this speculative and sentiment-driven market,” said a stockbroker, asking not to be identified.

The index had risen 19 per cent in 15 sessions through Monday on hopes that the newly-appointed Securities and Exchange Commission Head will come up with ideas to revive the market, which is down 3.71 per cent since the start of the year.

The bourse has been overbought since 28 August, Thomson Reuters data shows. The 14-day Relative Strength Index on Wednesday was at 77.799, well above the upper neutral range of 70.

Turnover on Wednesday was Rs. 1.22 billion ($ 9.25 million), more than the year’s daily average of Rs. 921 million.

The Bourse enjoyed a net foreign inflow of Rs. 189.7 million worth of shares, extending the net foreign inflow so far this year to Rs. 29.8 billion.

The rupee closed firmer at 131.55/60 to the dollar compared with Tuesday’s close of 131.90/95 as banks sold dollars on stock-related transactions amid lack of importer dollar demand, dealers said.

Foreign buying was seen on JKH, Commercial Bank, Lion Brewery, and Lanka Hospitals among others.