US Federal Reserve interest rate hike speculation hits stock market

By Hiran H.Senewiratne

The ripple and negative effects on the CSE from ongoing tensions between the US and Russia over the Ukraine issue and the speculation in the international media that the US Federal Reserve is to adjust interest rates, negatively impacted the global stock market yesterday, stock market analysts said.

The stock market dipped sharply on the previous day led by big cap counters due to investor concerns on macroeconomic issues but was able to maintain a healthy turnover level. Therefore, with the negative trend continuing in the market, apart from macro issues, the month- end profit- takings put the market into red territory, analysts said.

Amid those developments both indices moved downwards. The All Share Price Index went down by 144.4 points and S and P SL20 declined by 48 points. Turnover stood at Rs 5.3 billion with a single crossing. The crossing was reported in Expolanka, which crossed 100,000 shares to the tune of Rs 37.6 million; its share price was Rs 376.

In the retail market top seven companies that mainly contributed to the turnover were, Expolanka Rs 1.01 billion (2.7 million shares traded), Softlogic Life Insurance Rs 556 million (3.9 million shares traded), Browns Investments Rs 376 million (22.9 million shares traded), Access Engineering Rs 308 million (nine million shares traded), Royal Ceramic Rs 227 million (2.9 million shares traded), LOLC Rs 222 million (174,000 shares traded) and LOLC Finance Rs 168 million (6.3 million shares traded). During the day 160.3 million share volumes changed hands in 41347 transactions.

During the day without any apparent reason Softlogic Life Insurance share prices appreciated by 11.5 per cent or Rs 11.75. Its share price shot up to Rs 145.25 from Rs 130.50. Hela Clothing shares have been oversubscribed 5.2 times.

It said high net worth and institutional investor participation was noted in Hemas Holdings, Vallibel One and Ceylon Cold Stores. Mixed interest was observed in Expolanka Holdings, Softlogic Life Insurance and Kelani Valley Plantations, while retail interest was noted in Industrial Asphalts, Browns Investments and Softlogic Capital.

The Capital Goods sector was the second highest contributor to the market turnover. Expolanka Holdings and Softlogic Life Insurance were also included among the top turnover contributors. The share price of Expolanka Holdings decreased by Rs. 13.50 (3.41 per cent) to close at Rs. 382.25.

Yesterday, the US dollar was quoted at Rs 201.58, which was the Central Bank controlled price. The actual price would be more than Rs 250.