Shares slip over 1 per cent in mid-market trade following CBSL decision on policy rates

By Hiran H. Senewiratne

Retail participation in the CSE yesterday was on a higher pedestal to that of institutionalized buyers because bargain collectors purchased cheap/ low cost stocks from the stock market following the downturn of the market for quite a long period.

However, shares slipped over 1 per cent in mid-market trade following the CBSL policy review meeting that kept policy rates unchanged, stock market analysts said. In November’s Policy review meeting, the Central Bank kept policy rates unchanged and decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 14.50 per cent and 15.50 per cent respectively.

“The investors were expecting rate cuts with inflation falling in October, but that didn’t happen, a top market analyst said. Amid those developments both indices moved downwards. The All Share Price Index went down by 145.7 points and S and P SL20 declined by 56.7 points. Turnover stood at Rs 1.45 billion sans any crossings.

In the retail market, top seven companies that mainly contributed to the turnover were; Lanka IOC Rs 667 million (3.7 million shares traded), Expolanka Holdings Rs 139 million (985,000 shares traded), CIC (Non-Voting) Rs 119 million (2.2 million shares traded), JKH Rs 64 million (459.000 shares traded), HNB Rs 60.8 million (810,000 shares traded), ACL Cables Rs 49.5 million (69, 0000 shares traded) and Lankem Developments Rs 42.8 million (1.4 million shares traded). During the day 32.9 million share volumes changed hands in 12000 transactions.

“Sri Lanka’s central bank is borrowing more from short term tenure due to high borrowing costs which have risen over 30 per cent, CBSL Governor Dr. Nandalal Weerasinghe said. Sri Lanka’s T-bill yields are over double those of the central bank’s key monetary policy rates.

Dr. Weerasinghe said the Central Bank has been borrowing mainly from three-month T-bills to ensure the higher borrowing cost will decline in the near future as inflation has started to decelerate.Yesterday the Central Bank- announced US dollar buying rate was Rs 360.99 and the selling rate Rs 371.83.

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