With deteriorating foreign exchange reserves

By Hiran H. Senewiratne

The Colombo Stock Exchange (CSE) is in the final week of trading for 2021 on a negative note  with both indices down although turnover improved sharply, stock market analysts said yesterday.

Market also saw high net foreign selling, increasing the year-to-date (YTD) net outflow over Rs. 51 billion with the deteriorating foreign exchange reserves. Therefore, the market witnessed significant profit takings this year especially among foreign investors. But current scenario has discouraged many investors and therefore they take profits and exit the market, market analysts said .

In contrast. with the depreciation of the rupee against the dollar most of the export sector counters performed reasonably well but the banking and financial sector counters were adopting a wait- and-see approach due the current distressing  foreign reserves situation, which could result in failure in debt servicing and making sovereign bond payments early next year, stock market analysts said

Commercial banks yesterday did not react in a negative manner despite the  Central Bank (CBSL) ordering all licensed banks to sell 25 percent of US dollars to the CBSL in a desperate measure to alleviate the forex shortage in the market and increase foreign currency.

According to the Central Bank amending the operating instructions on extending the incentive scheme for inflows of workers’ remittances from Monday, the Governor of the Central Bank has informed the CEOs of all licensed banks the changes made to mandatory foreign exchange sales to the CBSL and to incentives offered under the incentive schemes.

Amid those developments, CSE activities were negative throughout the day, because Index weighted Senkadagala Finance share price depreciated further, even after the previous day’s dip. Its share price dropped by 25 percent or Rs 239. Its share price started trading at Rs 964 and at the end of the day it had a depreciation of Rs 725 tus contributing 50 negative points to the All Share Price Index.

Therefore, both indices moved downward. All Share Price Index down by 100.79 points and S and P SL20 down by 2.94 points. Turnover stood at Rs 5.67 billion with seven crossings. Those crossings were reported in Commercial Bank, which crossed 7.2 million shares to the tune of Rs 582.6 million and its share price traded at Rs 78, Melstacorp 10 million shares crossed for Rs 550 million and its share price traded at Rs 55, Citizens Developments Business Finance 2.9 million shares crossed for Rs 506 million and its share price traded at Rs 170, Nation Trust Bank 4.2 million shares crossed for Rs 231 million and its share price traded at Rs 54, LB Finance two million shares crossed for Rs 136 million and its share price traded at Rs 58, Amand Bank 20 million shares crossed for Rs 88 million and its share price traded at Rs 4.40 and Lanka IOC 325,000 shares crossed for Rs 24.2 million and its share price traded at Rs 74.50.

In the retail market top seven companies that mainly contributed to the turnover were Prime Lanka Residencies Rs 388 million (31.9 million shares traded), Expolanka Holdings Rs 375 million (one million shares traded), SMB Leasing Rs 185 million (90.8 million shares traded), Myland Developments Rs 172.8 million (7.8 million shares traded), Lanka IOC Rs 157 million (two million shares traded), Royal Ceramic Rs 117 million ( 1.5 million shares traded), and Browns Investments Rs 114 million (eight million shares traded).

During the day 317 million share volume changed hands in 42000 share transactions of the day. It is said that the high net worth and institutional investor participation was noted in Udapussellawa Plantations and Hapugastenne Plantations.