Sri Lanka stocks in correction after rally
ECONOMYNEXT- Sri Lanka’s stocks fell 0.72 percent on Tuesday, ending a five day rally amid higher volumes, brokers said.
The All Share Price Index (ASPI) closed 43.45 points lower at 5,951.75 amid high volatility, reaching a daily high of 6,045.29 in the first half hour of trading and then falling to an intra-day low of 5,930.17 over the next hour.
The benchmark index had closed at a 6-month high of 5,995.20 on Monday after gaining 335.43 points in five straight days.
The more liquid S&P SL20 Index closed 0.85 percent or 25.83 points lower at 3,024.99 on Tuesday.
Market turnover was 2.2 billion rupees, with 55 stocks gaining and 126 falling.
Strong rallies are usually followed by corrections. In the early days of the rally, volumes were thin, more selling came in the last two days, brokers said.
Punters of margin were also sitting on profits and were willing to sell, brokers said. When the market turns, those on margin were also likely to sell.
Sri Lanka’s economy is recovering from a currency collapse in 2018 and the central bank has also used it coercive power to enforce controversial deposit rate cuts, making stocks an alternative option especially for people who are not poor unlike small bank depositors, analysts have said.
There was heavy foreign participation with net inflows of 274 million rupees into the market.
There were crossings (negotiated deals) worth 283 million rupees in John Keells Holdings, 135 million rupees in Melstacorp.
Sri Lanka’s largest beer producer, Lion Brewery Ceylon, contributed most to the ASPI fall, closing 49.50 rupees down at 550.50 rupees a share.
Sri Lanka Telecom closed 1.70 rupees down at 29.60 rupees a share, while Commercial Bank closed 2.10 rupees down at 111 rupees a share and Sampath Bank closed 4.10 rupees down at 175.50 rupees a share, also pushing the ASPI down.