Rising gold and oil prices exert negative impact on share market

By Hiran H.Senewiratne

The increase in global oil and gold prices created a negative investor sentiment at the CSE yesterday. Although the stock market commenced operations on a positive note it subsequently moved to red territory with the increase in global oil prices by US$ 30 per barrel and gold by US 2000 per pound, stock market analysts said.

The government is now in a dilemma on whether it should increase fuel prices or not, because if it increases these prices it would trigger a higher inflation rate and if it does not increase fuel prices and absorbs the losses, it would create major fiscal policy issues due to heavy money printing, stock market analysts added.

The current scenario dragged both CSE indices down. The All- Share Price Index went down by 283 points and S and P SL20 declined by 116 points. Turnover stood at Rs 3.5 billion with three crossings. Those crossings were reported in Access Engineering which crossed two million shares to the tune of Rs 49 million, its shares traded at Rs 24.50, JKH 220,000 shares crossed to the tune of Rs 31.8 million, its shares traded at Rs 144.50 and Renuka Holdings 1.7 million shares crossed to the tune of Rs 26.2 million, its shares traded at Rs 15.

In the retail market the top seven companies that mainly contributed to the turnover were; Commercial Leasing and Finance Rs 797 million (16.7 million shares traded), Expolanka Holdings Rs 392 million (1.4 million shares traded), LOLC Holdings Rs 224 million (232,000 shares traded), LOLC Finance Rs 214 million (10.3 million shares traded), JKH Rs 153 million (one million shares traded), Sinhaputhra Finance Rs 151 million (five millions shares traded) and Browns Investments Rs 137 million (11.9 million shares traded). During the day 102 million share volumes changed hands in 31000 transactions.

It is said high net worth and institutional investor participation was noted in JKH, Hemas Holdings and Hayleys. Mixed interest was observed in Expolanka Holdings, Lanka IOC and Royal Ceramics, while retail interest was noted in Browns Investments, Commercial Leasing and Finance and LOLC Finance.

The Diversified Financials sector was the top contributor to the market turnover (due to LOLC Holdings and Commercial Leasing and Finance).

Yesterday, the US dollar was Rs 201.63, which was the Central Bank controlled price. The Central Bank imposed a Rs 203 ceiling for the US dollar in order to prevent inflationary pressure. This year food inflation reached 25 percent, the historic highest rate, financial sources said.