Bourse slips on concerns bank shares are overbought

STOCKS stumbled yesterday, after two consecutive days of gains, led by banks such as FirstRand with the sector caught in the cross hairs of a technical sell-off.

The benchmark Top40 index dropped 0.99 percent to 46 591.35 points. The broader all share index, which scaled a record peak on Tuesday, sank 0.9 percent to 51 770.59.

The banks index declined 2.57 percent, its steepest drop in six months, after its 14-day relative strength index, a mo- mentum indicator tracked by analysts, strayed into overbought territory in the previous session.

The sector looked ripe for more selling, based on other momentum indicators and technical patterns, George Glynos, the managing director at financial consultancy ETM Analytics, said. “That’s quite a big move on the banks index; if it closes the week around these levels we will have a fertile environment for a further correction,” he said.

FirstRand, the country’s second-largest bank, ended 3.27 percent lower at R42.88, the biggest decline among blue chips, while smaller rival Nedbank shed 3.01 percent to close trade at R237.99.

Barclays Africa Group, which posted a 10 percent increase in first-half earnings yesterday, skidded 1.86 percent to end the day at R169.10.

Other decliners included African Bank, which slipped 5.71 percent to R6.11, its fifth day of declines to the lowest since November 2003.

Lonmin lost 1.14 percent to R42.51, its second day of losses as it sold shares to meet a black ownership deadline.

Decliners outnumbered advancers 166 to 132, according to preliminary bourse data.

Among advancers were Eqstra, which gained 2.58 percent to R6.77, and SacOil, which rose 5.56 percent to 57c.