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Sri Lanka stocks end down 0.40-pct

Feb 12, 2010 (LBO) - Sri Lankan shares ended weaker Friday, dragged down by more profit taking following the recent rally and the fall in the prices of shares with a big weighting on the indices, brokers said. In one, 62,000 shares of John Keells Holdings were traded at 162 rupees each. John Keells Holdings closed at 162.50 rupees, down 1.25.

In the other crossing, 60,000 DFCC Bank shares were done at 175. DFCC closed at 176.25 rupees, up 1.25, with altogether 380,000 shares traded.

Brokers have said the market had been looking ‘overheated’ after the recent rally sent share prices to new highs and that a correction was near.

The indices Friday were also dragged down by the fall in the share price of Environmental Resources Investment, an investment holding company, which now has a big weighting on the index.
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The company stock price had risen sharply this year prompting the markets regulator to probe the trading.

Brokers said it was mainly retail investors who had been buying the stock and that they had been unnerved by news of the regulator’s interest in the share trades and had sold.

Environmental Resources Investment shares closed at 207 rupees, down 27 rupees, with prices of its warrants also weakening.
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The stock’s prices recent rally had put it among the top 10 firms on the Colombo bourse in terms of market capitalization.

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The All Share Price Index closed at 3,709.97, down 0.40 percent (14.87 points) while the more liquid Milanka index fell 1.12 percent (47.64 points) to close at 4,215.89.

Turnover was 974 million rupees, according to stock exchange provisional figures.

“The market correction was mainly because of profit taking,” said Nikita Tissera, research manager at SC Securities. “In no market can you see sustainable linear growth.”

But he said the market is likely to pick up again especially given the recovery in company earnings with the end of global recession and the island’s ethnic war.

“Earnings that have been reported so far have been relatively positive especially from the plantations sector and most others.”

There were only a couple of crossings or off-the-floor deals Friday.

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