Aug 25, 2008 (LBO) – Sri Lankan stocks weakened further Monday with brokers saying the only hope for an immediate recovery being a cut in fuel prices now that global crude oil prices were on the decline.
The All Share Price Index fell 0.20 percent (4.74 points) to 2,409.63 while the Milanka dropped 0.30 percent (8.36 points) to 2,803.60.
Turnover was 114.8 million rupees with a government victory in two provincial polls over the weekend failing to revive the market from its slumber and speculative trading in second-rung shares continuing.
The indices were dragged done by losses in The Bukit Darah, John Keells Holdings and Distilleries.
Heavy speculative trading by small investors was seen again in Ceylon & Foreign Trades and Chemical Industries (Colombo).
CFT gained 32.11 percent or 8.75 rupees to 36 rupees with 692,800 shares traded while
CIC rose 1.69 percent (75 cents) to 45 rupees with 312,700 shares changing hands
Chinthana Hatangala of stock brokers Lanka Securities said a retail fuel price reduction might help to revive the market.
“If fuel prices are revised that could have a positive impact on the market as it affects company profits, especially in the manufacturing and construction sectors.”
World oil prices declined in Asian trade Monday to around 113-114 dollars a barrel as the US currency’s recent gains sapped appetite for dollar-denominated commodities including oil, dealers said.
Persistent worries about slowing economic growth globally were also pushing oil prices lower, they said.
Stock brokers said many local companies have been reporting lower prices, partly because of higher energy costs.
Record inflation and high borrowing costs have also eroded corporate profitability.