Rising inflation leaves depressing impact on stocks

By Hiran H.Senewiratne

CSE trading activities during the first half of yesterday were positive following the announcement of some positive corporate results coupled with dividend payments by companies to shareholders. However, during the latter part of the day the market turned negative with the witnessing of heavy profit takings, stock market analysts said.

The reason for investor sentiment to drop yesterday was because the Central Bank had announced Sri Lanka’s inflation rate for the month of October at 7.6 percent, while in the previous month (September) it was 5.7 percent. According to analysts, the Central Bank has so far printed more than Rs 1.46 trillion. Due to that there is a steep increase in the money supply. Further, the Colombo Consumer Price Index also indicated price increases of certain essential food items in the country, which was one of the negative impacts of the increase in supply side inflation, analysts said.

Amid those developments both indices are negative. All Share Price Index went down by 30.81 points and S and P SL20 declined by 30.87. Turnover stood at Rs 3.7 billion with two crossings. Those crossings were reported in Commercial Bank, which crossed one million shares to the tune of Rs 89 million and its shares traded at Rs 89 and Sampath Bank 400,000 shares crossed for Rs 22.8 million, its shares traded at Rs 57.20.

In the retail market top five companies that mainly contributed to the turnover were; Expolanka Holdings Rs 941 million (4.4 million shares traded), Royal Ceramic Rs 432 million (7.1 million shares traded), Browns Investments Rs 241 million (22.1 million shares traded), Commercial Leasing and Finance Rs 161 million (3.3 million shares traded) and ACL Cables Rs 157 million (2.3 million shares traded). During the day 96 million share volumes changed hands in 32000 transactions.

Yesterday, the US dollar was quoted at Rs 201.95 as per the Central Bank controlled price for the purpose of controlling the price escalation of essential prices. The actual US dollar rate is at the Rs 230 level.