Spotlight on sectors

The Colombo Stock market is seeking foreign funds to bolster the ailing indices which dropped 8.5% in 2011 but was ranked 10th in the global ranking. Here, Acuity Stock Brokers depicts the performance of the diverse sectors in the September 2011 quarter (the latest figures released by the CSE).

“We believe that a widening trade deficit is a significant headwind to contend with,” the stock broking house said in its Economy and Strategy update for 2012 while reiterating that policies to attract private investment will be critical in maintaining forex stability. Recent moves to depreciate the rupee by 3% were seen as prudent to increase export competitiveness and correct imbalances in the trade account.

Foreign exchange rates are expected to remain broadly stable given the Central Bank’s commitment to maintaining forex stability and recent initiatives to attract inflows. The Central Bank projects Gross Domestic Product to grow 8% in 2012.

Inflation was 4.9 % In December as per the Colombo Consumer Price Index and interest range around 10-12%.

“Although short-term rates are likely to experience some upward pressure due to liquidity shortages in money markets, we expect medium term rates to remain low for longer to stimulate private credit growth,” Acuity said in its outlook for 2012. Subdued domestic inflation and lower global commodity prices will deem an upward movement in interest rates unlikely.