IMF bailout-linked worries have depressing impact on bourse

By Hiran H.Senewiratne

Investor sentiment remained depressed with CSE activity dipping to a new low yesterday because of investor worries connected to an impending IMF bailout, stock market analysts said.

If the government goes for IMF recommendations, it will likely jack up the tax rate, especially Corporate Tax, to increase government revenue and would cut down costs in certain sectors. This would affect several corporate sector entities, market analysts added.

The Cabinet of ministers had given Finance Minister Basil Rajapaksa the go -ahead to seek International Monetary Fund assistance, a government minister said, as the soft-pegged rupee suffered the worst currency crisis in its history. However, the Central Bank Governor Ajith Nivard Cabraal insists on going for a home- grown solution, analysts said.

Further, stock market investors are also adopting a -wait- and- see approach to a probable interest rate hike, which could compel people to go for fixed income earning instruments, such as Fixed Deposits, analysts explained.

Yesterday, the Index plunged sharply during the first 10 minutes of trading and thereafter gathered a short-lived positive momentum followed by a ceaseless downward trend. Amid those developments both indices moved downwards. All Share Price Index fell by 280 points to end at 10284.30 and the S and P SL20 dropped by 104.28 points to end the day at 3512.50 pints. Turnover stood at Rs 1.66 billion with a single crossing. The indices remained in negative territory due to price declines of major blue-chip companies during the day.

The crossing was reported in HNB (Non- Voting), which crossed 659,000 shares to the tune of Rs 84.7 million and its shares traded at Rs 128. In the retail market top seven companies that mainly contributed to the turnover were; Expolanka Holdings Rs 340 million (1.3million shares traded), Browns Investments Rs 122 million (11.4 million shares traded), Dialog Axiata Rs 121 million (10.7 million shares traded), Lanka IOC Rs 110 million (2.3 million shares traded), Access Engineering Rs 83.2 million (4.1million shares traded), LOLC Holdings Rs 74.5 million (93000 shares traded) and LOLC Finance Rs 64.5 million (3.9 million shares traded). During the day 90 million share volumes changed hands in 21000 transactions.

It is said that high net worth and institutional investor participation was noted in Access Engineering, Royal Ceramics and Hayleys. Mixed interest was observed in Expolanka Holdings, LOLC Holdings and Dipped Products, while retail interest was noted in Browns Investments, SMB Leasing nonvoting and Dialog Axiata.

Exterminator IPO oversubscribed yesterday, which was a small IPO to raise Rs 60 million. The company will issue 10 million shares at a share price of Rs 6 to raise Rs 60 million.

Yesterday, the US dollar was quoted at Rs 269.99, with the free float of the rupee against the dollar initiated by the Central Bank. Until last week the Central Bank controlled the rupee and imposed a ceiling of Rs 203.