Nov 27, 2008 (LBO) – Sri Lankan share prices rose Thursday, breaking a long slide but brokers said the gains could be short-lived given the negative investor sentiment, poor company earnings outlook as well as rupee devaluation fears.
The All Share Price Index rose 3.47 percent (54.59 points) to end at 1,625.88 while the more liquid Milanka gained 3.78 percent (66.67 points) to end at 1,830.75. Turnover was 165 million rupees.
Mohan Thangarajah of First Guardian Equities said two big deals accounted for most of the day’s trading volume.
Just over two million shares of Distilleries Company changed hands in several big blocks at 53 rupees, up 1.75 rupees.
The transactions added 106.9 million rupees to the day’s turnover.
Associated Property Development rose 15.38 percent (eight rupees) to 60 rupees with 242,300 shares traded, generating 16.8 million rupees in turnover.
“There was no depth in the market with most other shares accounting for only a few millions,” said Thangarajah.
Dialog Telekom gained 50 cents to end at 6.50, Sri Lanka Telecom went up 1.25 to 33.50 rupees and John Keells Holdings was up 25 cents to 62.50 rupees, all on small volumes.
Lanka Cement was the most actively traded stock, ending up 50 cents at 7.25 rupees.
Thangarajah said he doubted Thursday’s recovery would last because of growing concerns of a sharp devaluation of the rupee and the slowdown in company earnings given high inflation and interest rates.
“The stock market is feeling the impact of not only negative sentiment and poor company earnings but also the prospect of a sharp currency devaluation.”
The central bank has spent 790 million dollars in the past two months to hold the rupee’s peg with the dollar but analysts say the currency is increasingly under pressure.
Exporters have also been calling for the depreciation of the rupee saying high domestic inflation was making them uncompetitive against other export origins.