Abstract:
Economic data analysis is the process of handling economic data revise beliefs about economic problems.
These problems have common structure; Row data are given on the past behaviours and decisions or actions
should be taken for predicting future results. Moreover, all the actions might involve under economic
decisions and set of mathematical assumptions. The main goal of this study is to investigate the directions
and movements of market prices and trade volume rates in Colombo Stock Exchange (CSE) during 2002 to
2011. The year 2009 was a landmark year for CSE. Many changes happened after the end of the civil war in
north part of the country. As a result of their enormous growth, they won Marketplace with the best
performance award in 2009. High volatile fluctuations with instability patterns are common phenomenon
in the CSE. Principal component method and ARMA models were used to identify the stock market
fluctuations. The results reveals that micro and macro-economic conditions, internal and local political
changers, interest rates and oil prices in the world has a direct impact on generating high volatility
fluctuations in CSE. In comparison with other markets, during a very short period, CSE has been reached to
top level compared with other exchanges around the world.
