Share market gains as a result of fuel price reduction

By Hiran H.Senewiratne

The stock market gained sharply yesterday in the aftermath of the peaceful revolt by the people against the incumbent regime and also on account of the recent fuel price reduction which resulted from the global oil price coming down, stock market analysts said.

The fuel price was the main contributory factor to the country’s inflationary pressure and some positive behaviour was observed in the market after the announcement of the Rs 20 reduction by the Ceylon Petroleum Corporation (CPC) and Lanka IOC, market analysts said.

It is said that owing to the global recession world oil prices are also coming down, which would positively impact the Sri Lanka economy. Further, certain media reports revealed a probable foreign exchange inflow to Sri Lanka. These positive statements sent the market to positive territory, which resulted in more investor participation in the market, stock brokers said.

The stock market witnessed share gains in mid-morning trade with the liquid index moving up over 1 per cent and ending on a positive note. The active S&PSL20 Index gained by over 5 per cent and the benchmark ASPI by over 3 per cent. The All- Share Price Index went up by 68.8 points and S and P SL20 rose by 18.6 points. Turnover stood at Rs 1.4 billion with a single crossing from JKH, which crossed 900,000 shares to the tune of Rs 109.8 million; its shares traded at Rs 122.

In the retail market top seven companies that mainly contributed to the turnover were; Hayleys Rs 367 million (5.1 million shares traded), Browns Investments Rs 171 million (21.5 million shares traded), Lanka IOC Rs 164.8 million (two million shares traded), Expolanka Holdings Rs 137 million (764,000 shares traded), Kelani Valley Plantations Rs 42.4 million (505,000 shares traded), LOLC Finance Rs 31.5 million (4.1 million shares traded) and Agalawatta Plantation Rs 27.4 million ( 831,000 shares traded). During the day 64.9 million share volume changed hands in 14000 transactions.

Meanwhile, the company with the biggest market capitalization at the CSE reported a major transaction recently. Expolanka Holdings, one of the subsidiaries Expolanka Freight (Pvt) Ltd., divested two companies belonging to them; namely, Pulsar Shipping (Pvt) Ltd., and Pulsar Marine Services (Pvt) Ltd., to PB Logistics (Pvt) Ltd. The total consideration of the two transactions was Rs 1.34 billion.

Expolanka Holdings divested the two companies as a strategic move and their market capitalization in the CSE was 10.8 per cent or Rs 349 billion.

Yesterday the Central Bank US dollar buying rate was Rs 357.60 and the selling rate Rs 368.34. Inflation is at 45.30 per cent at the moment but this rate would likely decline if the global oil prices come down drastically with the ongoing global recession. At present, the crude oil price is US $ 100 and is expected to come down to US $ 60 or little more than that and would benefit the balance of payments issue to a greater extent, some economists said.