After steady climb Colombo main stock index ASI closed 112.46 points or 2.12 percent higher at 5420.97 while Milanka Index closed at 4733.16, up 132.53 points. Blue Chip John Keells Holdings Plc (JKH) gained 7.40 to close at Rs 173.90. More than 1.3 million JKH shares changed hands during the day. Total market turnover amounted to 1.52 billion rupees.

1,568,500 shares of Commercial Bank of Ceylon traded and closed 10 cents higher at Rs 100.10 while Sri Lanka Telecom was up by one rupee to end the day at Rs 48.90. Union Bank closed at Rs 18.00. up 1.10. Environmental Resources Investments Plc (GREG) also traded heavily and closed 2.70 higher at Rs 22.10. Hotel Sigiriya was up by 8.50 to close at Rs 73.80. Keells Foods Products Plc gained twenty rupees to close at Rs 92.00.

Distilleries Company of Sri Lanka Plc lost 2.10 to close at Rs 126.60. HDFC closed at Rs 1050.00, down thirty rupees.

Net foreign inflow of Rs 448,899,380.00 recorded for the day. Sri Lanka Rupee/USD exchange rate is stabilising around Rs 118/119 level after hitting 120.90 last week.

Access Engineering Limited is offering 20 million shares at Rs 25.00 per share to the public. Access Engineering IPO will open their subscription list on 6^th March 2012.

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Understanding how to make money in a down market is one of the keys to financial security in today’s world. When one considers the financial turmoil around the world at the present time, it becomes clear that most markets are going to be down for the foreseeable future. However, there are other options available when the stock markets are down to a point that little or no profit is being yielded on investments.

One option that has come to the forefront in recent years is the FOREX (FOReign currency EXchange) market. This trading venue is open virtually 24 hours a day, 7 days a week. It is much more volatile than stock markets, making it an ideal place to make large amounts of profit in a short time. Of course, there is also a greater chance to lose money, so care should be exercised and one should perform due diligence before investing. Below, one can find some tips that should prove helpful in understanding how to make money in a down market.

How to Short in FOREX Trading

One primary key to making profitable trades is known as short selling. In essence, this term means selling currencies that one does not currently own. When one sells short, the contract includes a time when the buyer is to take possession of the currency sold. Between the time of the sale and the transfer of possession, the seller hopes that the price of the currency being sold will continue to drop. If it does, he/she will be able to purchase the currency at a lower price than he/she has already sold it.

The key to profiting in this fashion is to follow the trends of different currency pairs closely. Those that are trending in a downward direction are ideal for short sales. However, one can still profit from short selling if the currency in question is highly volatile and moving up and down regularly. One should try to sell when the currency is in an upward swing and buy when it is at the bottom of the downward swing.

Why the FOREX Market Does Not Have Bad Times

Unlike stocks and other commodities, FOREX markets do not experience serious drops or bad times. This is because all currencies are paired with other currencies. Whenever one loses value, its partnered currency rises by a corresponding amount. This is because one is using one currency to purchase the other in each pairing.

Forex is extremely fluid, meaning that values change quite a bit from minute to minute. One can watch the movements of different pairs and see when one or more pairs begin to take on a bearish trend. Most trends are not very steep or incredibly long-lived, but those who watch the markets closely can see them developing and act accordingly.

One may also create orders based on anticipated movements among currency pairs. When the price reaches the set level, the sale takes place. If the pair does not move in the expected direction, one can create “stop loss” orders that limit his/her exposure.

Use Financial Crises as Opportunities to Make Money

Different regions experience financial crises at different times for a plethora of reasons. The European Union is currently experiencing serious financial turmoil. This has created a situation in which the EUR/USD currency pair is fluctuating heavily. Depending on what financial news is released at different times, the Euro becomes stronger or weaker against the dollar.

In many cases, the news creates a situation where the Euro continues to lose value against the dollar. This is known as a bearish trend. Such trends create ideal trading conditions for short sales. In fact, the longer the trend lasts, the better it is for the trader. This is because he/she can hold the position open longer and maximise his/her profit on the trade.

Most of the time, currency pairs do not develop a specific trend that can be traced over a period of days. Often, trends can not even be traced in hours in this market. However, the fluidity of the market and the amount of fluctuation that takes place in short time periods creates just as many, if not more, opportunities for traders to profit in this market.

Currency pairs that fluctuate greatly are among the most common sources of income potential. The goal is to buy low and sell high or to sell high and buy low. One can do this in either order in this market. Positions may only be open for a few minutes or seconds. Some may remain open for a few hours. However, it is extremely rare for any trade to carry over from one day to the next because the market swings so quickly that one may show a profit at the end of the day and be at a loss at the beginning of the next.

When on finds a currency pair that is following a trend, either bearish or bullish, traders may jump on that pair at many different points along the trend. This leaves one in more direct control of how much risk he/she is willing to take and how much profit can be expected.

As one can see, it does not really matter if currencies are in a clearly defined trend or not. Heavy fluctuations in value can create just as many opportunities for profit if one watches the market and acts in a timely manner. The key is to be prepared to act quickly when the market changes its direction. This capability shows traders how to make money in a down market.

Even though the world is in an economic recession that has caused the stock markets to lose much of their value, knowing how to make money in a down market can help one to remain financially secure. Short selling is one key to dealing with markets that are trending downward. However, many stock markets do not allow short sales. This is one feature that makes FOREX a more attractive market for beginning investors.

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The bench mark All Share Index gained a whopping 5.08 percent to close at 5279.09 while Milanka was up by 4.10 percent to close at 4552.84. Index heavy weighted Blue Chip John Keells Holdings Plc closed 3.50 higher at Rs 163.00. Total turnover was amounted to Rs 1.15 billion.

223 stocks made gains while only six stocks closed lower after day’s trading. Sri Lanka Telecom Plc was up by 2.80 to close at Rs 47.00. Distilleries Company of Sri Lanka closed 5.40 higher at Rs 125.40. Environmental Resources Investments Plc (GREG) gained 3.60 to end the day at Rs 19.00. More than 3 million shares of GREG changed hands.

Sri Lanka Rupee stabilised around Rs 118/ 119 against US $ after sharp deprecation during last few days. Foreigners bought Rs 168.53 million worth of stocks and sold stocks valued at Rs 117.52 million.

The sustainability of this up trend will depend on how investors select their stock investments. Unfortunately there were fundamentally weak speculative stocks among today’s gainers list.

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Central Bank of Sri Lanka Press Release on Recent sharp depreciation of Sri Lanka Rupee.

As has been announced from time to time, the Central Bank has been intervening in the domestic forex market in recent years to build up foreign reserves and to smooth out any undue fluctuations in the exchange rate. Such interventions resulted in the build up of foreign reserves to a historically high level of US dollars 8.2 billion by August 2011, thereby preventing an excessive appreciation of the rupee. However, during the second half of 2011, the widened trade deficit underpinned mainly by the sharp increase in import expenditure necessitated the Central Bank to supply foreign exchange to meet a part of such increased demand, despite increased receipts on account of remittances, tourism and inflows to the capital and Financial Account.

Although the Central Bank expected this import demand to decelerate towards the latter part of 2011 due to the uncertain global conditions, such a moderation did not take place and therefore, on 3^rd February 2012, the following policy measures were introduced to strengthen the external sector of the economy, and to contain the high growth in bank credit: first, an increase in the policy interest rates by 50 basis points with effect from 3^rd February 2012, so that the resultant increase in borrowing cost would restrain credit growth leading to the reduction of import demand; and second, a Central Bank direction to commercial banks to limit their credit expansion in 2012 to 18 per cent [23 per cent if 5 per cent of funds could be raised from abroad] as compared to the 2011 increase of 34 per cent, with a view to effectively reduce the quantity of credit granted.

At the same time, in view of increased oil prices in the international market, the government has also decided to increase the domestic prices of petroleum products with effect from 12^th February 2012. Such policy action would encourage energy conservation and help reduce the use of oil products, thereby reducing the expenditure of imports further. In addition, several expected inflows to the Financial Account of the Balance of Payments in 2012, as set out in the Central Bank’s ‘Road Map for 2012 and beyond’, are now at varied stages of realisation and such inflows are expected to augment inflows during 2012.

In this background, with effect from 10^th February 2012, the Central Bank decided to limit its intervention in the forex market, so as to limit the supply of foreign exchange to the extent needed to settle the bulk of petroleum import bills, and to absorb surplus forex liquidity that would flow into the market from various sources including the issue of Tier-2 capital by banks, inflows to equity and bond markets etc., that may otherwise lead to the undue appreciation of the rupee.

In light of the above measures and actions, the Central Bank has projected that the Balance of Payments in 2012 would record a comfortable surplus and such a surplus would serve to ease any pressure on the forex market. In that context, the recent depreciation of the Sri Lanka Rupee, which seems to be a reaction of forex dealers adjusting to the more vibrant market driven policy framework, would appear to be a temporary over-shooting of the realistic level.

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No one truly knows when a Bear Market will end. One can say bear market will end when Market Price Earnings Ratio falls to single digit. If that so CSE may fall further because CSE’s current Market PER is around 13x. However the most important factor to change the bear run is change in Investors sentiment. When people see more sell orders in order book of a stock everyone will try to sell but as soon as they start to see enough buy orders sellers may change their minds.

Colombo Stock Market started trading for a fresh week with the bad news of steep fuel price increase. In early trading ASI was crashed almost 4.5 percent but later recovered half of early losses. At the end of Monday’s trading ASI lost 117.01 points or 2.2 percent to close at 5199.98 while more liquid Milanka index closed 4524.17, down 102.97 points. Day’s total turnover was amounted to 1.46 billion rupees.

187 stocks lost their value during the trading session while only 37 stocks closed higher. Index heavy Carsons Cumberbatch Plc lost 17.50 to close at Rs 432.50 while John Keells Holdings Plc closed 3.30 lower at Rs 160.30. Environmental Resources Investments Plc (GREG) lost three rupees and closed at 20.20. Commercial Bank (COMB) lost 50 cents to close at Rs 100.50.

Foreign investors were net buyers with net inflow of Rs 44,334,737.00.

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Bear Markets last for months or even years. Most investors get fooled by short-term upside movement during this prolonged bear markets. Some people buy speculative stocks during these short-term spike and attract further losses towards them. Only handful of stocks with strong valuations may keep their share prices less vulnerable to sharp falls. For example Commercial Bank of Ceylon managed to keep their price around Rs 100.00 level during past few months because of its strong fundamentals.

At the end of the Thursday’s trading All Share Price Index dipped by further 2.3 percent or 125.26 points to close at 5316.99 while Milanka closed at 4627.14, down 94.65 points. Day’s total market turnover was amounted to Rs 870.81 million.

Commercial Bank Plc (COMB) has declared cash Dividend of Rs.1.50 per share & Scrip Dividend (Voting & Non-Voting) Scrip Dividend Voting Proportion : 01 for 56.33 shares Number of Shares to be issued : 13,581,396 Non-Voting Proportion : 01 for 47.22 shares Number of Shares to be issued : 1,108,902. COMB voting shares closed at Rs 101.00, down 40 cents.

Index heavy BUKI lost 48.70 to close at Rs 896.60 while Hatton National Bank closed 8.40 lower at Rs 139.50. John Keells Holdings (JKH) lost 1.30 to close at Rs 163.60. 1,256,600 shares of JKH traded during the day. Softlogic lost one rupee to end the day at Rs 13.90. 186 stocks closed lower than previous day while only 26 stocks closed positively.

In view of 10-02-2012 being declared a Special Bank Holiday in lieu of Holy Prophet s Birthday which falls on Sunday, please note that 10-02-2012 has been declared a Holiday by the CSE.

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Commercial Bank of Ceylon Plc (COMB) accounted for more than 63 percent of the day’s total turnover. 8,582,900 shares of COMB changed hands and closed 1.50 higher at Rs 102.00. ASI was down by 24.96 points to close at 5561.43 while MPI closed at 4805.99, down 7.13 points. Total turnover amounted to 1.34 billion rupees.

119 stocks closed lower while only 50 stocks closed higher. Index heavy The Bukit Darah Plc was up by thirty-six rupees to close at Rs 997.40 but only 100 shares traded. 1,045,600 shares of Distilleries Company of Sri Lanka traded and closed 80 cents higher at Rs 135.00. Soft Logic Holdings closed at Rs 15.00, up 40 cents.

Illiquid Lanka Ashok Leyland Plc lost 310 rupees to end the day at Rs 2500.00 but only 100 shares done. Carsons Cumberbatch Plc was down by 10.90 to close at Rs 479.00. Bairaha Farms (BFL) lost 8.50 to close at Rs 167.70. Colombo Dockyard Plc closed at Rs 220.00, down five rupees. Environmental Resources Investments Plc lost 50 cents to close at Rs 26.60.

Foreign investors sold Rs 887.91 million worth of stocks and purchased stocks valued at Rs 259.16 million.

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After last week rally in Banking Stocks the usual bearish trend in CSE continued for the 3rd consecutive day. At the end of Thursday’s trading CSE All Share Index lost 76.84 points or 1.35 percent to close at 5605.49 while MPI closed 68.35 points lower at 4841.11. Turnover was amounted to 970.12 million rupees.

Heavy trading witnessed in Environmental Resources Investments Plc (GREG) normal shares and warrants. 1,026,400 GREG (N) shares changed hands and closed one rupee lower at Rs 26.00. Over 7.2 million GREG.W0002 traded and closed at Rs 1.60, down 3.90. According to the CSE and in terms of a clarification received from SEC, trading of the GREG.W0002 warrant will not be permitted after 03-02-2012.

Commercial Bank of Ceylon Plc was down by three rupees to close at Rs 101.70. John Keells Holdings Plc closed 2.50 lower at Rs 167.50. Despite 92.29  percent growth in quarterly profit LB Finance lost 5.20 to close at Rs 126.80. Cargills (Ceylon) Plc closed at Rs 5.00 to close at 180 but only 300 shares traded. 6,196,200 shares of Asia Asset Finance (AAF) traded and closed 20 cents lower at six rupees.

CTC a unit of multinational BAT lost nine rupees to close at Rs 490.00. CTC reported earning per share of Rs 35.07 for the year ended 31st December 2011 against Rs 27.21in 2010. Company further said for year 2011, interim dividends totalling Rs 28.90 less tax have been declared and paid already.

Foreigners were net buyers with net inflow of Rs 116,146,473.00.

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Within the first hour of trading ASI crossed 5800 mark with strong gains in banking stocks. However the bullishness was slowed down as investors start to take their profit. At the end of Monday’s trading ASI was up by 30.12 points to close at 5755.56 while Milanka index was up by 54.40 points to close at 4976.21. Total turnover was amounted to 1.40 billion rupees.

Commercial Bank of Ceylon Plc (COMB) voting shares touched Rs 112.00 but closed only1.40 higher at Rs 105.40 while COMB non voting stocks was up by 5.40 to end the day at Rs 88.50. Nation Trust Bank (NTB) closed at Rs 62.10, up 90 cents. 2,856,000 of National Development Bank shares changed hands and closed 3.70 higher at Rs 127.00. Sampath Bank Plc was up by 11.90 to close at Rs 190.50. Hatton National Bank closed 5.70 higher at Rs 150.10. Conglomerate John Keells Holdings Plc (JKH) closed at Rs 170.00, up 2.10. More than 1.2 million shares of Union Bank traded and closed 10 cents higher at Rs 20.10.

Exactly 100 stocks closed on a positive note while 101 stocks lost their value during the trading session. Capital Development and Investment Company Plc was down by 34.30 to close at Rs 245.00. Distilleries Company of Sri Lanka Plc lost three rupees to close at Rs 137.00.

According to the announcement made by Browns Investments (BIL), company has bought 51 percent of Ajax Engineers for 100 million rupees. BIL closed 10 cents higher at Rs 3.90. Ajax Engineers is a leader in installing aluminum curtain walls, doors, windows and glass facades.

Rs 313,969,945.00 net foreign outflow reported for the day.

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ASI was up by 133.04 points or 2.38 percent to close at 5725.44 while more liquid Milanka index was up by 163.35 points or 3.43 percent to close at 4921.81. Total turnover amounted to 1.71 billion rupees.

Almost all banking stocks gained today as Fitch Ratings Lanka issued a positive outlook for Commercial Banks in Sri Lanka. 3,483,500 shares of Commercial Bank of Ceylon Plc (COMB) traded and closed 4.00 rupees higher at Rs 104.00 while Sampath Bank was up by 8.70 to end the day at Rs 178.60. Nation Trust Bank Plc closed at Rs 61.20, up five rupees. National Development Bank closed 4.90 higher at Rs 123.30.

Fitch Ratings Lanka says that its Outlook for the majority of Sri Lankan banks is Stable, underpinned by improved earnings prospects due to post-war growth in the domestic economy as well as the government’s capacity to support the banking system. However, rapid loan growth will test the banks’ risk management systems and funding profiles. They further said that Sri Lankan banking system’s ability to manage above-average loan expansion on a sustained basis. However, the agency believes that any deterioration in asset quality may not be as severe as that seen in 2008 and 2009.

There were 193 gainers and only 20 losers for the day. John Keells Holdings Plc was up by 4.50 to close at Rs 167.90. More than 14 million shares of newly listed Asia Asset Finance Ltd changed hands and closed at Rs 7.10 the same price of the previous day.

Banking stocks may continue to go up during the next week trading.

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