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CSE on red streak after record streak

28 Jan 2022

  • Closes trading in red for three consecutive days 
  • Brokers’ Assoc. Prez. says it is panic selling due to herd mentality
  • Expects the market to recover soon
    BY Shenal Fernando The bloody week observed in the Colombo Stock Exchange (CSE) so far has been the result of panic selling induced by a herd mentality and the market is expected to rebound shortly, supported by the release of the rumoured largely positive quarter results of the listed companies over the coming days, claimed industry sources.  Speaking to The Morning Business yesterday (27), Colombo Stock Brokers’ Association (CSBA) President Jaliya Wijeratne stated: “What we feel is that the market will recover soon as this fall is totally due to panic selling created by a herd mentality. On top of it, there is also month-end correction selling coming into the market. Also we should take into consideration margin selling.”   Explaining further, he stated that the current fall observed in the market is due to panic selling following a series of recent social media posts predicting a market correction by persons whose motives are questionable.  Pointing to the 300 point fall and the subsequent rebound of the All Share Price Index (ASPI) observed yesterday at around 1 p.m., he claimed that it is clear that there are people waiting to collect.   However, he did admit that some counters have broken their previous trading patterns and were trading on a speculative basis. Such shares too have fallen over this period.  He further noted that a lot of people are now trading by themselves, and when they panic they tend to dump large quantities, thereby creating a vicious cycle of panic.  “The market will bounce back but people are waiting to see the collection. They are looking at the market and not collecting themselves in fear of another panic selling coming in,” stated Wijeratne.  On Monday (24), the ASPI closed up slightly by 12.5 points despite falling by 100 points during the day. This shaky start set the tone for the week, with the market falling by 173.9 points on Tuesday (25), 144.4 points on Wednesday (26), and 169.8 points yesterday.  Therefore, during the week, the ASPI has fallen by 469.2 points and the Standard and Poor’s Sri Lanka 20 (S&P SL20) index has fallen by 212.11 points. The ASPI recently reached its all-time high of 13,457.2 points on 18 January 2022.

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