Sri Lankan stock market faces downturn, inflation rises

At the close of the week, the Sri Lankan stock market faced a downturn, primarily influenced by decreases in the energy and consumer staple sectors. The market index registered a 0.86% decrease over the week, marking the third consecutive weekly decline. Inflation in Sri Lanka showed an uptick in June, climbing to 1.7% year-on-year from the previous month's 0.9%, aligning with expectations. Notably, food prices rose by 1.4% in June after a stable May, while non-food item prices increased by 1.8% during the same period.

Among the standout performers on the index were Ceylinco Holdings PLC and Senkadagala Finance PLC, boasting gains of 3.5% and 9.5%, respectively. Trading volume on the index surged to 59.7 million shares, up from the previous session's 40.9 million shares. Market turnover also saw a significant increase to 2.23 billion Sri Lankan rupees ($7.3 million) from 1.01 billion rupees in the previous session. Foreign investors acted as net sellers, offloading stocks worth 47.7 million rupees, while domestic investors emerged as net buyers, acquiring shares worth 2.20 billion rupees.

The recent fluctuations in the Sri Lankan stock market, coupled with the inflationary trends, highlight the dynamic nature of the country's economic landscape. Investors are closely monitoring these developments to make informed decisions. Understanding the impact of inflation on stock prices and investor behavior is crucial for navigating the financial markets effectively.