Market declines for third day

The indices at the Colombo Stock Exchange saw its third day of declines with the ASPI losing 4 points (-0.2%) to close at 2,384, while the MPI, which tracks the most liquid shares, lost 9 (-0.3%) points to close at 2,730.

The indices were dragged down once again by large caps primarily by John Keells Holdings, which closed down at Rs 92.00, while Commercial Bank (Rs 116.00) HNB (Rs 103.00) and Hayleys (Rs 136.00) all closed down. Turnover of Rs 128.7 million was mainly driven by the oil plays Lanka IOC (Rs 35.4 million) and Chevron (Rs 12.1 million), with both the companies expected to do well with the global oil prices coming down in international markets.

Lanka IOC (LIOC) which retails motor fuel and lubrication predominantly in the Western Province also has plans to enter the bunker market.

The Government of Sri Lanka controls the prices of fuel which has meant that in a regime of rising crude oil prices all retailers made heavy losses.

The GoSL last allowed a price increase in May when global oil prices were above US$ 130.00/barrel. Now with global prices oil declining LOIC stand to benefit with improving margins.

On Tuesday Brent crude dropped below US$100.00/barrel, but recovered on the OPEC President’s call on member states to limit production to maintain prices. LIOC ended the day at Rs 27.00.

Chevron Lubricants (LLUB) too stands to gain with improving margins as the company too made price increases to its range of lubrication products in early June.

Source: First Guardian Equities