By Duruthu Edirimuni ChandrasekeraView(s):
The Colombo Stock Exchange (CSE) retailers have found new life going into the holiday season, but this recent surge could be catching a number of traders off guard, given the elevated short-interest levels in penny stocks seen on retailers, analysts say.
Analysts called it the ‘herd instinct’ and noted that retailers are comfortable with trading in shares below Rs. 10, termed as penny stocks.
Over the past two months, 90 per cent of the shares traded on the CSE were by local retailers. There was hardly any foreign investments. “The local retail buyers are buying shares – mostly penny stocks – with the intention of selling on the same day. These investors are short term, short gain day trading investors,” an analyst pointed out. He said this is evident from the shares traded over the past two months such as Browns Investments Ltd (BIL), Expolanka plc, Milk Foods plc, Melsta plc, LOLC and most banking counters. BIL and LOLC do