• Sat. Aug 13th, 2022

Policy Rate Hike Dampens the Equity Market

Bourse recorded losses for the fourth straight session with investors taking a defensive approach following the policy rate hike by the Central Bank of Sri Lanka (CBSL), First Capital Research said.

CBSL at its Monetary Policy review meeting decided to increase the SDFR and SLFR rates by 100bps to 14.50% and 15.50% respectively in an attempt to contain any build-up of adverse inflation which has escalated higher than expected levels

The index witnessed sizeable volatility during the session with mixed activities while during the latter period comments from the central bank governor on a possible increase of inflation 70% hampered market sentiment. As the majority of the banking sector counters started to plunge amidst the monetary policy tightening, the index witnessed a gradual decline and closed for the day at 7,058, losing 59 points. Turnover of Rs. 791.5Mn was below the weekly average of Rs. 1,084.7Mn while Capital Goods and Banking sectors accounted for a joint contribution of 44%. However, with lackluster participation foreign investors remained net buyers (Rs. 181.4Mn) for the fourth straight day.

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