Sri Lanka stock trading halt owing to error trade: CSE

An error trade in Distilleries Company of Sri Lanka shares triggered a half-hour market halt on the Colombo stock exchange Friday morning, the bourse said in statement.

The market halt was imposed at 11.00 a.m. after the bourse's Milanka price index dropped over five percent from the previous market day's close. The stock exchange said the MPI had dropped by over five percent owing to an error trade relating to 1,200 shares of Distilleries Company at 100 rupees a share.
The closing price of Distilleries Thursday was 149.60 rupees.
The CSE said broker firm responsible for the error trade had notified the bourse of the error and that it will be conducting an inquiry into it.

Stocks recovered after the trading resumed but were still weaker in afternoon trade. Colombo stocks had fallen 2.7 percent on Thursday.

"A market halt is used internationally by stock exchanges as a procedure for volatility management," the CSE statement said.

"Under such procedures trading may be halted temporarily or, under extreme circumstances, a market may be closed prior to normal close of the trading session." 

Nov 25, 2011 (LBO) 

Learn about Bonds

While stocks, both common and preferred, are equity securities and represent ownership in a corporation,

bonds are debt securities. A bondholder has, in effect, a debtor/creditor relationship with the corporation or governmental agency that issued the bond. Many stocks pay dividends; most bonds pay interest. Bonds are quite important in the financial scheme of things. Most of the money raised in the primary market (the new-issue market) is in the form of bonds rather than stocks. Bonds issued by a given company are safer than any equity security issued by that same company because their interest must be paid in full before any dividends may be paid on either preferred or common stock. Broadly speaking, bonds are higher on

the safety scale than stocks but generally not as rewarding an example of the risk-reward relationship.

Bonds issued by corporations (as opposed to bonds issued by municipalities and the federal government) trade in points and eighths as a percentage of par. One bond is considered to have a par value of  LKR100. or LKR1000. This means that if you own one bond, the company that issued the bond owes you LKR100 and will pay you that LKR100 when the bond matures. This LKR100 is the bond’s par value, also called its face value. Either term means the amount of the loan represented by the bond, that is, the amount the issuing company has borrowed and must repay when the due date (maturity date) arrives.

To be continued.....

Colombo Stocks in Uncertainty

Colombo Stocks in Uncertainty

The Colombo stock markets was acting as worlds no 1 market after the 2009 end of the war. inverters were over confident about Sri Lanka and was investing in our stocks. as usual the government was keen about this and introduces more and more regulation and tried to get maximum use of the situation by introducing continuous IPOs to the market.As a result of too much regulation and trying to get the too much advantage of the situation , finally the stock market has become a mess and its continuously going down  day by day.. so the investors are loosing money day by day....

once the ASI was reaching the 8000 and at this moment 19.11.2011 its more closer to the 6000 mark and expected to decline more. As can be seen in the graph the more liquid stocks has fallen sharply than ASI cause people has taken their money out selling the stocks  and the other stocks has fallen less as its not easy to sell them without incurring a big loss. How ever what ever happens the brokers and the government is getting their commissions for the buying or selling so they are still happy and only the poor investors are suffering.

Although the stock market showed a bull trend on last two days  its not possible to expect that we are in the bottom of the decline now. there was no real backing trend or momentum to take the drive forward and hence it is expected  the ASI to decline more in the next week also. so the investors better be careful on buying new shares  as none knows whether we have reach the bottom or not....

Sri Lankan stocks closed higher

Sri Lankan stocks closed higher Thursday after several days of losses with gains in most shares amidst thin trading, analysts said

They revealed that the Colombo Bourse bloomed in green territory today, after it observed deep steep sliding during recent past. The discounted market reflected an investor buying sentiment after so long days, which had resulted positive closures on both the indices, a stock broker said.  The benchmark All Share Price Index (ASPI) gained 69.68 points to close the day at 6,092.56; the liquid Milanka Price Index (MPI) gained 37.86 points and closed the day at 5,310.85. The market capitalization stands at Rs. 2.19Tn.

217 counters traded during the day to record a turnover of Rs. 827.4Mn which is an increase of 40% compared to the value recorded yesterday. John Keells Holdings (Rs. 205.6Mn), Commercial Bank (Rs. 43.5Mn) and HVA Foods PLC (Rs. 34.8Mn) were the major contributors to the daily turnover.  A Crossing took place on JKH.N for a value of Rs. 74.6Mn.

A total of 57Mn shares changed in hands during the trading day which is a reduction of 37% compared to yesterday. SMB Leasing PLC (14.7Mn), Blue Diamonds Jewellery [X] (8.5Mn) and SMB Leasing PLC (5.4Mn) were the top traded counters for the day further capturing investor’s interest. Price gainers outnumbered the price losers by 168:29. The price gainers were led by People's Fin (Price gain of 19%) on the contrary Autodrome (Price loss of 7.6%) led the price losers. The foreign investors reflected a selling sentiment recording a net foreign outflow of Rs 135.5Mn.(BS) 

-from Times online 17th nov 2011

Predicting Bull and Bear Markets

Predicting Bull and Bear Markets
Investors turn to theories and complex calculations to try to figure out in advance when the market will scream upward or tumble downward. In reality, however, no perfect indicator has been found.
In their attempts to predict the market, economists use technical analysis. Technical analysis is the use of market data to analyze individual stocks and the market as a whole. It is based on the ideas that supply and demand determine stock prices and that prices, in turn, also reflect the moods of investors. One tool commonly used in technical analysis is the advance-decline line, which measures the difference between the number of stocks advancing in price and the number declining in price. Each day a net advance is determined by subtracting total declines from total advances. This total, when taken over time, comprises the advance-decline line, which analysts use to forecast market trends.

Generally, the A/D line moves up or down with the ASI. However, economists have noted that when the line declines while the ASI is moving upward, it indicates that the market is probably going to change direction and decline as well.

Investing During Bull Markets

A key to successful investing during a bull market is to take advantage of the rising prices. For most, this means buying securities early, watching them rise in value and then selling them when they reach a high. However, as simple as it sounds, this practice involves timing the market. Since no one knows exactly when the market will begin its climb or reach its peak, virtually no one can time the market perfectly. Investors often attempt to buy securities as they demonstrate a strong and steady rise and sell them as the market begins a strong move downward.
Portfolios with larger percentages of stocks can work well when the market is moving upward. Investors who believe in watching the market will buy and sell accordingly to change their portfolios.
Speculators and risk-takers can fare relatively well in bull markets. They believe they can make profits from rising prices, so they buy stocks, options, futures and currencies they believe will gain value. Growth is what most bull investors seek.
The opposite of all this is true when the market moves downward.

 

Investing During Bear Markets
Successful investing in bear markets can involve many different strategies. Some investors try to secure their assets in less volatile securities such as fixed-income bonds or money market securities. Others wait for the downward trend of prices to subside. When it does, they begin buying. Still others seek to take advantage of the falling prices.
When the market goes down, portfolios with a greater percentage of bonds and cash fare well because their returns are fixed. Many financial advisors emphasize the value of fixed income and cash equivalent investments during market downturns.
Another strategy is to simply wait for the downward prices to reverse themselves. Investors who wish to remain invested in stocks may seek out companies in industries that perform well in both bull and bear markets -- shares in these companies are called defensive stocks. The food industry, utilities, debt collection and telecommunications are popular defensive stocks. However, there is no guarantee that a defensive stock will perform well during any market period.
Finally, some investors attempt to exploit profits from the downward price movements. One method is to sell at the beginning of a downward turn, when prices are still high. Proponents of this strategy wait for prices to bottom out before reinvesting in the market. However, as simple as it sounds, this process involves the nearly impossible task of timing the market. Another, more complicated way to attempt to profit from falling prices is called selling short.

There are many investment methods that seasoned investment professionals use to take advantage of opportunities during bull or bear markets. Methods such as cost averaging, selling short, and diversification exist. Understanding well-founded strategies will help you to improve your chances for superior performance in either market environment. However, there is no surefire way to always succeed. The best weapon you can employ is education. Do your homework!

Understanding Bull & Bear Markets

Understanding Bull & Bear Markets

Simply put, bull markets are movements in the stock market in which prices are rising and the consensus is that prices will continue moving upward. During this time, economic production is
high, jobs are plentiful and inflation is low. Bear markets are the opposite--stock prices are falling, and the view is that they will continue falling. The economy will slow down, coupled with a rise in unemployment and inflation. In either scenario, people invest as though the trend will continue. Investors who think and act as though the market will continue to rise are bullish, while those who think it will keep falling are bearish.

The basics of bull and bear markets  Specifically we will cover the following:
• What Drives Bull and Bear Markets?
• Predicting Bull and Bear Markets
• Investing During Bull Markets
• Investing During Bear Markets

What Drives Bull and Bear Markets?

What causes bull and bear markets? They are partly a result of the supply and demand for securities. Investor psychology, government involvement in the economy and changes in economic activity also drive the market up or down. These forces combine to make investors bid higher or lower prices for stocks.
To qualify as a bull or bear market, a market must have been moving in its current direction (by about 20% of its value) for a sustained period. Small, short-term movements lasting days do not qualify; they may only indicate corrections or short-lived movements. Bull and bear markets signify long movements of significant proportion.

There are several well-known bulls and bears in American history. The longest-lived bull market in U.S. history is the one that began about 1991 . Other major bulls occurred in the 1920s, the late 1960s and the mid-1980s. However, they all ended in recessions or market crashes.the Sri Lankan great bull market started after 2009 war winning against lasted for around two years and now on a continuous bear market.
The best-known bear market in the U.S. was, of course, the Great Depression. The Dow Jones Industrial Average lost roughly 90 percent of its value during the first three years of this period. There were also numerous others throughout the twentieth century, including those of 1973-74 and 1981-82.

 

 

 

 

The Life of a Trade

The life of a trade can vary a great deal depending on whether the trade involves a listed, CSE or over-the-counter bulletin board security. The following description is intended to give you a general idea of how the process of trading stocks works.

Trading is based on supply and demand. When you buy or sell a stock, you are literally trading with another investor — someone in your city, across the country or on the other side of the world. An order from you to buy a stock must be matched with a seller's order to sell. If you place an order on the CSE, or one of the many other exchanges, this match may be done electronically.
If your order is sent to the trading room floor of one of the exchanges, the auction process begins. A member of the stock exchange walks to the appropriate trading area where your stock is traded and presents your order. Sometimes there will be a broker in the crowd with a sell order at the same price. In this case your order will be completed or filled. Brokers must often act quickly or risk missing the market. If a broker hesitates, a competitive bid could be placed, driving up the market price for the next trade.

The broker may also hand your order to a specialist. The specialist is a person in each trading area, whose job is to guarantee a fair and orderly market by matching buys and sells or by buying or selling themselves if needed. When an order is away from the market, it can be placed under a specialist's care. From this point on the specialist is in charge of representing your order.

If you placed a GTC order with us, it would stay open until it is filled, canceled by you, or until five days in CSE. If the order is filled, the broker or specialist will report the fill to us. You can choose to be contacted by phone, fax or e-mail. Of course, if you monitor the Order Status section of the website, you can also see when the order is filled. You will also receive a  Mail copy of your order confirmation and fill. You should check your order confirmation carefully no matter how it is received.

Once the order is filled another process kicks into place; one which is generally invisible to you. First the fill is reported to the Market Data System of the exchange. This system transmits the trade details such as the stock name, the number of shares traded and the price of the trade to all interested parties through the ticker tape. The trade can be seen online, TV or through other media by the investor and other interested parties. The ticker tape will also update the information (sometimes with a time lag) on your Quote Monitor.
The tickets sent to your brokerage firm and the brokerage firm of the person who bought or sold the stock from you is entered into a computer. Over the next few hours, the two trades are matched to make sure they agree. If they do not agree, the brokers meet again to settle any differences. This will not affect your fill. Once agreement is ensured, the settlement process begins. Settlement of the trade generally occurs three business days from the actual trade date. Upon settlement the brokerage firms exchange (usually electronically) the stock certificates and the money for the stock.