Stock Market bubble amid low interest rates and optimism about IMF’s second review

By Hiran H. Senewiratne

The Colombo Stock Exchange (CSE) witnessed a bullish session yesterday due to the low interest rate regime and the government’s optimism on the IMF’s second review. This had triggered a boost in share trading, according to market analysts.

As a result,, the turnover surpassed more than Rs two billion and the number of trades touched 24000 mark. Amid those developments both indices moved upwards. All Share Price Index up by 189.81 points while S and P SL20 up by 62.43 points. Turnover stood at Rs 2.6 billion with two crossings. Those crossings were reported in Central Finance, which crossed 1.2 million shares to the tune of Rs 123.6 million and its share price traded at Rs 103 and JKH 600,000 shares crossed to the tune of Rs 114 million and its share price traded at Rs 190.

In the retail market top seven companies that mainly contributed to the turnover were LMF Rs 216 million (7.8 million shares traded), Associated Motor Finance Rs 152 million (5.8 million shares traded), LOLC Finance Rs 150.7 milli9on (28 million shares traded), HNB Rs 141 million (894,000 shares traded), Browns Investments Rs 136.6 million (26.3 million shares traded), Central Finance Rs 76.1 million (735,000 shares traded) and JKH Rs 69.3 million (370,000 shares traded). During the day 160 million share volumes changed hands in 24000 transactions.

The Diversified Financials sector was the top contributor to the market turnover (due to LOLC Finance and Associated Motor Finance Company) whilst the sector index gained 1.52%. The share price of LOLC Finance increased by 20 cents to Rs. 4.80. The share price of Associated Motor Finance Company gained by Rs. 3 to Rs. 24.50.

The Food, Beverage & Tobacco sector was the second highest contributor to the market turnover (due to Lanka Milk Foods and JKH) whilst the sector index increased.

Meanwhile, Sri Lanka rupee opened stronger at Rs 307.65/75 to the US dollar in the spot forex market stronger from Rs 307.80/88 a day earlier, dealers said, while bond yields were slightly up. A bond maturing on 01.08.2026 was quoted at 10.85/11.00 percent. A bond maturing on 15.09.2027 was quoted at 11.90/12.10 percent from 11.90/12.00 percent. A bond maturing on 01.07.2028 was quoted at 12.29/30 percent from 12.20/30 percent.