‘Forced selling’ by some investors dampens market

By Hiran H.Senewiratne 

The CSE suffered further setbacks yesterday as both indices declined. Stockbrokers believe that forced selling of shares by some investors put some index heavy companies’ activities on to a negative trajectory, market analysts said.

Some banks and finance companies offer credit facilities  to investors to invest in the stock market against their existing portfolio or by keeping their stocks as collateral. With the dropping of the market, the last resort available for investors is to sell their stocks and settle the credit facility to the respective bank or finance company. This is one of the main reasons for the stock market downturn, market analysts added.

Index experienced downward movement yesterday followed by a short-lived uptrend during the early hour of trading but thereafter witnessed a strong downtrend once again. Therefore, both indices witnessed a downward trend. All Share Price Index went down by 191.05 points and S and P SL20 declined by 52.98 points. 

Turnover stood at Rs. 3 billion with two crossings. Those crossings were reported in Lion Brewery, which crossed 328,000 shares to the tune of Rs. 177 million, its shares traded at Rs. 540 and Commercial Bank 1 million shares crossed for Rs. 84.5 million, its shares trading at Rs. 84.50.

In the retail market, top five companies that mainly contributed to the turnover were, LOLC Rs. 555 million (1.8 million shares traded), Browns Investments Rs. 296 million (56.4 million shares traded), Expolanka Rs. 290 million (6.6 million shares traded), JKH Rs. 250 million (1.7 million shares traded) and Dipped Products Rs. 127 million (3 million shares traded). During the day, 133.8 million share volumes changed hands in 22972 transactions.  

Sri Lanka’s rupee was quoted steady at 196.00/196.50 levels to the US dollar in the one-week forwards market on Thursday while bond yields edged up marginally after the monetary policy review, dealers said.

The rupee last closed in the one- week forward market at 196.00/197.00 to the dollar on Wednesday. Sri Lanka’s Central Bank decided to keep the interest at current levels. It said it will keep the interest rate low.