Speculation on bank interest rates affects stock market

By Hiran H.Senewiratne

Market speculation on bank interest rates to be raised following the Central Bank’s monthly monetary review meeting today, resulted in CSE trading activities reacting negatively yesterday, stock market analysts said.

Further, government securities are also showing an increasing trend and the acute inflationary pressure on the economy put the market into a more volatile situation. Due to that both indices moved downwards. The All Share Price Index went down by 142 points and the S and P SL20 declined by 52.4 points. Turnover stood at Rs. 3.3 billion with five crossings.

The Central Bank will announce policy rates today under Governor Ajith Nivard Cabraal and many analysts see at least a 50 basis point hike in the key policy rates as the Central Bank has allowed Treasury Bill rates to rise, signaling such an increase.

The crossings were reported in HNB, which crossed 1.5 million shares to the tune of Rs 230 million and its shares traded at Rs 149, Commercial Bank 1.8 million shares crossed for Rs 158 million, its shares traded at Rs 85, Watawala Plantation 2.6 million shares crossed for Rs 153 million, its shares traded at Rs 57, Expolanka Holdings 150,000 shares crossed for Rs 28.2 million, its shares traded at Rs 188.50 and Three Acre Farms 100,000 shares crossed for Rs. 21 million, its shares fetching Rs.210.

In the retail market, five companies that mainly contributed to the turnover were, Browns Investments Rs 531 million (51.3 million shares traded), Expolanka Holdings Rs 400 million (2.7 million shares traded), LOLC Holdings Rs 210 million (356,000 shares traded), Royal Ceramic Rs 151 million (3.2 million shares traded) and Hayleys Rs 111 million (1.1 million shares traded). During the day 146 million share volumes changed hands in 27000 transactions.

Yesterday, the Sri Lankan rupee was quoted at Rs. 200.70 against the US dollar. This was the Central Bank’s controlled price, which was Rs. 202 recently.