Sri Lankan shares fell for a second straight session on Tuesday as small-scale investors continued to take profits on a resurgent market but analysts expect a market correction to drive down the bourse sooner than later. The All-Share Price Index of the Colombo Stock Exchange fell 6.82 points or 0.16 percent to 4,215.22 after hitting a record high of 4,260.11 points on Wednesday.
'Retailers are still dominating and driving the market,' said Jaliya Wijeratne, institutional sales director at SMB Securities.
At least two other analysts said the market has now overheated and it may come down sharply either later this week or early next week as some shares had risen without any clear fundamental reasons.
Heavy retail buying has driven the bourse's price-to-earning ratio to 20.81, bourse data showed, compared to around 11 percent a year ago when Sri Lanka ended a 25-year war last May.
Foreign investors bought a net 58 million rupees' ($51,020) in shares on Tuesday, data showed. They have sold a net of 16.5 billion rupees' worth of shares so far this year.
Analysts said foreigners may wait for directions from disbursement of an IMF loan and the next budget.
An International Monetary Fund mission is in Sri Lanka to discuss the island nation's fiscal reforms and fiscal deficit targets in the next budget before deciding whether to disburse its delayed third tranche of a $2.6 billion.
The Treasury Secretary P.B. Jayasundera on April 29 said the reforms would be introduced in the 2011 budget.
The IMF has urged the Sri Lankan government to speed up fiscal reforms if wants to get the loan back on track.
The bourse is up 24.5 percent so far this year, making it Asia's best-performing market.
The top mobile phone operator Dialog Telekom closed 3 percent weaker at 8.25 rupees a share, while the leading fix line telephone operator Sri Lanka Telecom closed 2.66 percent weaker at 36.50 rupees.
Traders said low interest rates kept turnover up. The day's turnover was 1.38 billion rupees, more than twice the 2009 average of 593.6 million rupees.
The market has shot up over 183 percent since it hit a four-year low on Dec. 30, 2008, rising in anticipation of the end of the country's 25-year war. Following on the end of the war in May, came a loan from the IMF in July, which helped to boost investor confidence.
The rupee closed up at 113.67/68 a dollar, compared to Monday's close of 113.62/65 on importer demand for dollars,' currency dealers said. It hit a 16-month high of 113.52 per dollar on May 4.
The interbank lending rate or call money rate rose to 9.072 from Monday's 9.035 percent.
reuters
'Retailers are still dominating and driving the market,' said Jaliya Wijeratne, institutional sales director at SMB Securities.
At least two other analysts said the market has now overheated and it may come down sharply either later this week or early next week as some shares had risen without any clear fundamental reasons.
Heavy retail buying has driven the bourse's price-to-earning ratio to 20.81, bourse data showed, compared to around 11 percent a year ago when Sri Lanka ended a 25-year war last May.
Foreign investors bought a net 58 million rupees' ($51,020) in shares on Tuesday, data showed. They have sold a net of 16.5 billion rupees' worth of shares so far this year.
Analysts said foreigners may wait for directions from disbursement of an IMF loan and the next budget.
An International Monetary Fund mission is in Sri Lanka to discuss the island nation's fiscal reforms and fiscal deficit targets in the next budget before deciding whether to disburse its delayed third tranche of a $2.6 billion.
The Treasury Secretary P.B. Jayasundera on April 29 said the reforms would be introduced in the 2011 budget.
The IMF has urged the Sri Lankan government to speed up fiscal reforms if wants to get the loan back on track.
The bourse is up 24.5 percent so far this year, making it Asia's best-performing market.
The top mobile phone operator Dialog Telekom closed 3 percent weaker at 8.25 rupees a share, while the leading fix line telephone operator Sri Lanka Telecom closed 2.66 percent weaker at 36.50 rupees.
Traders said low interest rates kept turnover up. The day's turnover was 1.38 billion rupees, more than twice the 2009 average of 593.6 million rupees.
The market has shot up over 183 percent since it hit a four-year low on Dec. 30, 2008, rising in anticipation of the end of the country's 25-year war. Following on the end of the war in May, came a loan from the IMF in July, which helped to boost investor confidence.
The rupee closed up at 113.67/68 a dollar, compared to Monday's close of 113.62/65 on importer demand for dollars,' currency dealers said. It hit a 16-month high of 113.52 per dollar on May 4.
The interbank lending rate or call money rate rose to 9.072 from Monday's 9.035 percent.
reuters
