Forced selling continues

econ wrote:

seyon wrote:This is not a forced selling, this is correction of ridiculous overvalued stock,

Can u ( as a rational investor) imagine, whether these stocks are fairly valued ?

BLUE -Rs.9
CSF - RS.30
CLND -Rs.55
PAP - Rs.9
ECL- Rs.7
PMB - Rs.35-40

and etc,etc,etc.....

but prices of these shares are not going down.
prices are going down for so called fundementaly strong shares.
for ex : ntb is 64 now. dfcc 155 ndb 158 etc..

Come on econ, See current price...

PAP-5.20
CLND - 40
PMB-27 ( it came down to 23)
CSF -24

seyon wrote:

econ wrote:

seyon wrote:This is not a forced selling, this is correction of ridiculous overvalued stock,

Can u ( as a rational investor) imagine, whether these stocks are fairly valued ?

BLUE -Rs.9
CSF - RS.30
CLND -Rs.55
PAP - Rs.9
ECL- Rs.7
PMB - Rs.35-40

and etc,etc,etc.....

but prices of these shares are not going down.
prices are going down for so called fundementaly strong shares.
for ex : ntb is 64 now. dfcc 155 ndb 158 etc..

Come on econ, See current price...

PAP-5.20
CLND - 40
PMB-27 ( it came down to 23)
CSF -24

But why do we say PAP, PMB... overvalued and some other blue chips are okay. Sometimes if you calculate the real PE ratio removing one time gains and considering if there is space for future growth, most of the blue chips are way overvalued. Take the banking sector shares. The real growth rate has been flat, hidden behind one time gains. Conglomerates have been making ends meet by doing stock trading.

seyon wrote:

econ wrote:

seyon wrote:This is not a forced selling, this is correction of ridiculous overvalued stock,

Can u ( as a rational investor) imagine, whether these stocks are fairly valued ?

BLUE -Rs.9
CSF - RS.30
CLND -Rs.55
PAP - Rs.9
ECL- Rs.7
PMB - Rs.35-40

and etc,etc,etc.....

but prices of these shares are not going down.
prices are going down for so called fundementaly strong shares.
for ex : ntb is 64 now. dfcc 155 ndb 158 etc..

Come on econ, See current price...

PAP-5.20
CLND - 40
PMB-27 ( it came down to 23)
CSF -24

but did you remember they were at very low prices.
for ex' clnd 20, csf 11 , pap 3.70 etc. so still they are trading at higher prices compare to fundementally strong shares.

if you take fundementally strong counters like banks they are going down day by day without any price increase at all.
fo ex ' comb - 275 -> 255 , ntb - 90s -> 60s , samp , 300->250s ,
rich - 15.50-> 12.20 etc..

econ wrote:

seyon wrote:

econ wrote:

seyon wrote:This is not a forced selling, this is correction of ridiculous overvalued stock,

Can u ( as a rational investor) imagine, whether these stocks are fairly valued ?

BLUE -Rs.9
CSF - RS.30
CLND -Rs.55
PAP - Rs.9
ECL- Rs.7
PMB - Rs.35-40

and etc,etc,etc.....

but prices of these shares are not going down.
prices are going down for so called fundementaly strong shares.
for ex : ntb is 64 now. dfcc 155 ndb 158 etc..

Come on econ, See current price...

PAP-5.20
CLND - 40
PMB-27 ( it came down to 23)
CSF -24

but did you remember they were at very low prices.
for ex' clnd 20, csf 11 , pap 3.70 etc. so still they are trading at higher prices compare to fundementally strong shares.

if you take fundementally strong counters like banks they are going down day by day without any price increase at all.
fo ex ' comb - 275 -> 255 , ntb - 90s -> 60s , samp , 300->250s ,
rich - 15.50-> 12.20 etc..

that i am telling these ridiculous shares unexpected price movement killing the mkt,

lets take the eg if the person bought PAP @ Rs.9 or CLND @ Rs.50, and could not sell, What he can do to cover the lost, He has to sell his Fundamental shares to cover the lost or the settlement.

This is a real scenario going on these days.

June 22, 2011 (LBO) - Sri Lankan stocks closed almost 01 percent lower Wednesday with continuous forced selling of client portfolios where the margin provided is in excess of 50 percent, brokers said.

The All Share Price Index closed at 6,927.03, down 0.99 percent (69.61 points) while the Milanka Price Index of more liquid stocks closed at 6,516.06, down 0.84 percent (55.28 points), according to stock exchange provisional figures.
Today’s ASI close was the lowest since January 11, 2011 and the MPI close was the lowest since September, 15 2010.

Turnover was 1.7 billion rupees. There were 52 gainers and 173 losers.

“Who should be blamed for this unwarranted market massacre where the retail investors are the worst affected?” asked Capital Trust Securities Director and Head of Research Sarath Rajapaksa.

He said strong company fundamentals and the robust economic fundamentals are definitely not reflected in the market performance.

Broker credit to clients have been restricted by the Securities and Exchange Commission, the market regulator, amid fears of a stock market bubble and brokers given time till the year-end to clear credit accounts.

Environmental Resources Investment closed at 60.70 rupees, up 30 cents or 0.5 percent.

Brokers said there was no meeting scheduled for Wednesday by the markets regulator on the investigation into the company, contrary to rumours.

Once again, East West Properties was the highest contributor of the day to turnover and closed at 16.30, up 1.20 rupees or 7.95 percent. More than 16 million East West Properties shares were traded generating 254 million rupees.

Brokers said seven million shares of People's Merchant Bank changed hands with heavy buying by high net worth investors and it closed at 27.30 rupees, up 3.40 rupees or 14.29 percent.

Kalamazoo closed at 3,214 rupees, up 714 rupees or 28.56 rupees. Eastern Merchant closed at 1249.90, up 249.80 or 24.98 percent.

Panasian Power closed at 5.20 rupees, down 20 cents or 3.70 percent with more than 22 million shared traded, becoming the most active stock of the day.

Serendib Land closed at 2214 rupees, down 536.00 rupees or 19.49 percent. Lanka Ashok Leyland closed at 4,000 rupees down 800 rupees or 16.67 percent.


The Colombo Fort Land closed at 78.50 rupees down 40 cents or 0.51 percent with a solitary crossing of 250,000 shares at 88 rupees. Aitken Spence Hotels closed at 75.30, down a rupee or 1.31 percent with a single crossing of 01 million shares at 76 rupees.

Hi All

Here we go. This proves there is forced selling happens.

As I said I'm stuck with PAP big time. So find reasons for the price drop. Today also one reason to be happy for me "Most active stock of the day".

If you have any good news related to PAP please do notify me cos the loss is somewaht equal to the gains i collected over few years. Ayway Still i have hopes

I think this Sarath's comment tells what is happening currently.

“Who should be blamed for this unwarranted market massacre where the retail investors are the worst affected?” asked Capital Trust Securities Director and Head of Research Sarath Rajapaksa.

He said strong company fundamentals and the robust economic fundamentals are definitely not reflected in the market performance.

Broker credit to clients have been restricted by the Securities and Exchange Commission, the market regulator, amid fears of a stock market bubble and brokers given time till the year-end to clear credit accounts.

Hopefully this will end by early next week. That's what I feel.

What you all think?

Suthar wrote:Hopefully this will end by early next week. That's what I feel.

What you all think?

I also think this will continue until 30.06.2011...............

Hi all...

Actually Market will be recover after June end I think... I dont ever think that margin trading method how much effected like this ... how shame ....!!! I much more concern about PAP also ... However it should go up....Rs 0.26/= Dividend has been offer to Rs 6.00 share... look at how much appreciated share in the market I dont why investors dont think about it...

Good luck...!!!

Force selling also a one of the profit generating machine which is use by brokers....that is y they hate this limitation implemented for credit facilities by CSE. First they give you a credit. Then the they will start force selling and investor who bought respective share has to bear with and hold the stock until price go up or sell the stock with loss. However most of time when we ask from broker to sell the stock , he says "Sir, pls hold your stock...there is no much interest for 01 lak"
Think Think...are you a winner?

Following is what I posted in http://forum.srilankaequity.com/t5149p20-massive-forced-selling-by-margin-traders .

Feel it is worth to re-post here.

Academic wrote:

As far as it is credit clearance period, it is possible to attribute any drop to credit clearance (force selling?). So according to my current thinking the credit clearance is like the wound of the beggar. I do not wonder if rulers extend the credit clearance period further.

In nutshell, "credit clearance" will be there so long as the market continue to drop. In other words, "market drop" is the cause and "credit clearance period" is the effect, not the other-way around as many think.

I feel brokers purposely force sell to stop T+5 rule.

Too much of anything good for nothing. Too long credit clearence period also the same

Aladin wrote:I feel brokers purposely force sell to stop T+5 rule.

Is they selling the shares they bought by the cash they have

Little bit of green appearing. The thing is sellers are impatient, once stock starts to pick all sellers put thier orders and make selling pressure high. Then we all know what's the impact