Rupee appreciation against US dollar generates positive sentiment in share market

By Hiran H. Senewiratne

With the improvement in macroeconomic indicators, the CSE witnessed some positive sentiment throughout yesterday. The rupee appreciated against the US dollar and the possibility that inflation will come down to single digits by year-end should compel interest rates to come down as well with some positive sentiment being seen in the CSE, market analysts said.

Sri Lanka’s shares gained in mid-day trade on positive sentiments on speculation of a potential conclusion of the IMF deal of US $ 2.9 billion, analysts said. “The market also anticipates rate cuts to be announced at the CBSL Monetary Policy review today, an analyst added.

Amid those developments both indices moved upwards. The All- Share Price Index went up by 111.2 points and S and P SL20 rose by 30.8 points. Turnover stood at Rs 1.5 billion with two crossings. Those crossings were reported in Sampath Bank, where 3 million shares crossed to the tune of Rs 150 million; its shares traded at Rs 53 and NDB 500,000 shares crossed to the tune of Rs 21 million, its shares fetched Rs 42.

In the retail market top seven companies that mainly contributed to the turnover were Commercial Bank, Rs 148 million (2.2 million shares traded), Sampath Bank Rs 131 million (2.4 million shares traded), Melstacorp Rs 69.2 million (1.2 million shares traded), Central Finance Rs 54.6 million (765,000 shares traded), Expolanka Holdings Rs 47.2 million (168,000 shares traded), HNB Rs 41.4 million (376,000 shares traded), HNB Rs 41.4 million (376,000 shares traded) and Softlogic Capital Rs 40.9 million (3.5 million shares traded).During the day 78.4 million share volumes changed hands in 16000 transactions.

It is said high net worth and institutional investor participation was noted in Lanka IOC, Chevron Lubricants and Bukit Darah. Mixed interest was observed in Hatton National Bank, Sampath Bank and JKH, while retail interest was noted in Softlogic Capital, Amana Bank and Access Engineering.

The energy sector was the top contributor to the market turnover (due to Lanka IOC), while the sector index gained 0.62 per cent. The share price of Lanka IOC increased by one rupee to Rs. 199.

The Food, Beverage & Tobacco sector was the second highest contributor to the market turnover (due to Bukit Darah) while the sector index increased by 0.40 per cent. The share price of Bukit Darah gained Rs. 12.50 (3.15 per cent) to Rs. 409.75.

The rupee was offered at Rs 346 at open in the spot market yesterday with no buyers, dealers said, up from the previous close of Rs 353.46/353.50 to the US dollar.

The Central Bank announced a guidance peg of Rs 353.46 to the US dollar Thursday, with a Rs 7.50 variance on either side. The rupee had been under upward pressure after the Central Bank stopped printing money.