Bull run on CSE ends, but market remains heated

The unprecedented bull run on the Colombo Stock Exchange ended at the close of trading on Friday with the All Share Price Index (ASPI) that hade been galloping for several previous days closing 143.94 points (1.53%) down at 8,668.07 while S&P SL 20 reflecting more liquid (and possibly stronger shares) gaining 8.85 points (0.25%) to close at 3,514,8.

Brokers and analysts said that that the correction process appears to have begun although both indices remain sharply up from levels posted until what one broker called “the crazy upward momentum” began several days ago.

Among the shares that declined Friday were hot counters like those belonging to LOLC Holdings, the Ishara Nanayakkara-controlled conglomerate and several Hayleys Group companies controlled by Mr. Dhammika Perera including the parent and the bigger subsidiaries like Haycarb and Dipped Products.

LOLC was down Rs. 8.50 to Rs. 512.75 on approx. four million shares done at between Rs. 498.25 and Rs. 574 in 3,245 trades when the market closed for the week on Friday. Likewise, the three Hayleys biggies, Hayleys, Haycarb and Dipped Products where 10 for one share splits (each existing share will be subdivided into 10) are pending also lost steam.

Hayleys was down Rs. 30.25 to Rs. 772 on approx. 0.3 million shares done in 592 trades between Rs. 755.50 and Rs. 815.Dipped Products declined Rs. 39.25 to Rs. 703 on approx. 0.5 million shares done between Rs. 680 – 760 on 1,676 trades while Haycarb lost Rs. 85.25 to close at Rs. 1,196 on 0.13 million shares done between 1,165 -1,280 in 662 trades.

The CSE has been posting turnovers running into billions hitting an all time high in the peak of the bull run. A feature of the red hot market was day trading by small investors (as well as some biggies) who took advantage of the upward momentum buying and selling on the same day with no cash outlay and paying only once and not twice on brokerage on two transactions.

“All they had to do was collect their profits at the end of the day,” one broker said. “It was very hard for us because we were getting so many telephone calls and could not offer serious advice because we had no sense of market direction.”

They were not willing to hazard a guess on what will happen when trading resumes on Monday given the way things went on the last several days, but most expected the correction of the ASPI which began on Friday to continue.

“Look at this one example,” one market player said. “Central Finance (CF) closed at Rs. 116.50 on Friday, up Rs. 3.50 on 1.26 million shares done between Rs. 115-135 in 583 trades. DFCC Bank lost 40 cents to close at Rs. 74.10 on 0.77 million shares done between Rs. 73.10 and Rs. 78 in 296 trades. DFCC’s net assets value is way ahead of CF. It makes no sense.”