High manufacturing costs having negative impact on CSE

By Hiran H.Senewiratne

CSE trading started on a positive note yesterday but did not sustain its momentum due to unfavourable macro- economic conditions. High global prices are worrying stock market investors because they tend to increase manufacturing costs, stock market analysts said.

High oil prices are putting pressure on the economy since Sri Lanka needs to pay a US $ 554 oil bill next month and is now left with only US $ 100 million from the Indian credit line. Therefore, the government has to look for another credit arrangement to find the balance payment of US$ 454 million. This has created some worries for stock market investors, market analysts said.

Analysts said that the market is extremely volatile with news of impending taxes weighing heavily on it. Moreover, an announcement made by the World Bank of a US $ 70 million disbursement for Sri Lanka and positive quarterly results/earnings in some companies did not considerably impact yesterday’s stock market, analysts added.

Amid those developments both indices showed a downward trend. The All-Share Price Index went down by 84.2 points and S and P SL20 declined by 17.91 points. Turnover stood at Rs 1.39 billion with a single crossing. The crossing was reported in HNB, which crossed 1.5 million shares to the tune of Rs 120 million; its shares traded at Rs 78.

In the retail market, top seven companies that mainly contributed to the turnover were; Browns Investments Rs 404 million (38.5 million shares traded), Expolanka Holdings Rs 156 million (698,000 shares traded), Melstacorp Rs 96.8 million (2.3 million shares traded), JKH Rs 69 million (555,000 shares traded), LOLC Finance Rs 65.8 million (6.8 million shares traded), Seylan Bank (Non- Voting) Rs 57.2 million (3.1 million shares traded) and Lanka IOC Rs 46 million (794,000 shares traded). During the day 130 million share volumes changed hands in 13000 transactions.

Yesterday two major companies showed some price appreciations due to positive quarterly earnings. Those two entities were; Aitkens Spence whose shares appreciated by 12 per cent or Rs 9.10. Its shares shot up to Rs 82.10 from the previous price of Rs 73 and Melstacorp share prices appreciated by seven per cent or Rs 2.80. Its share price moved to Rs 43.60 from Rs 40.80.

Sri Lanka’s commercial banks quoted the dollar at Rs 365.7 against telegraphic transfers yesterday while in Central Bank interbank spot trade it was at Rs 360.7 under a daily guidance rate.

Commercial banks were quoting Rs 355.7/365.7 for telegraphic transfer dollars yesterday, up from Rs 354.5/364.5 on Friday. Yesterday the Central Bank guidance margin was set at plus Rs 1.00 or minus Rs 4.00.