The Colombo stock market bounced back to close high after dipping in early morning trade on initial concerns over Budget 2022.

When the market opened, the benchmark All Share Price Index (ASPI) plunged by 398 points but spirited buying by die-hard investors enabled it to close up by 86 points from Friday’s closing and erasing early loss. Turnover was a high Rs. 7 billion involving 316 million shares. 

The rebound, however, was thanks to improved sentiments on the illiquid LOLC Group counters such LOFC, LOLC itself, CLC and NIFL whilst Expolanka and CTC also boosted the index.

Soon after Friday’s presentation of Budget 2022 by Finance Minister Basil Rajapaksa, investors were concerned over the retrospective 25% surcharge on taxable income of Rs. 2 billion and above as well as additional taxation on the financial sector. However, greater awareness and understanding among investors over the weekend lessened the negativity. Some described early morning dip as a knee-jerk reaction by some investors. 

Independent analysts opined that Budget 2022 will have some negative impact on corporates and the economy as evidenced by the statement issued by Ceylon Chamber of Commerce, hence some investors will remain cautious. 

Asia Securities said the indices showcased a strong rebound after an early plunge on Monday with the ASPI closing 86.3 points or 0.81% higher at 10,753 while the more liquid S&P SL 20 index ended with a fractional loss of 17.6 points or 0.5% at 3,598. 

LOFC led activity, generating Rs. 2,133 million of turnover on the back of heavy retail buying, followed by EXPO (Rs. 428 million) and BIL (Rs. 424 million).

“As the first session following the budget reading, held on Friday (12), the market opened with mixed reactions today as investors awaited fresh cues for market direction amid price declines in momentum-driven stocks. As such, the ASPI commenced the session with a 294-point decline and scaled to an intra-day low of 10,373. 

“However, trading sentiment improved quickly as retail investors capitalised on the plunge to re-enter in selected heavyweight stocks at lower levels, boosting the ASPI to record an immediate pickup of 250 points to 10,623. Thereafter, the index continued its upward trajectory to surpass the 10,700 level and eventually ended with a sizable gain to record another all-time closing high at 10,753,” Asia said. 

However, the S&P SL20 index edged lower due to price declines in HNB, SAMP, and RCL. Market breadth remained negative with 75 stocks closing higher while 126 recorded price losses.

Asia said foreigners recorded a net outflow of Rs. 56.7 million while their participation increased marginally to 1.6% of turnover (previous day 1.2%). Net foreign buying topped in LOFC at Rs. 18.8 million and net selling topped in LLUB at Rs. 34.7 million. 

First Capital said the bourse gripped onto the positive territory after exhibiting a boomerang recovery during the first few minutes of trading. 

“Index plunged as soon as the trading switched on and bottomed out to an intra-day low of 10,354. However, market exhibited a quick recovery in the next few minutes and continued on a gradual uptrend followed by a sideways movement to the rest of the trading session and displayed a further uptrend towards the end of the session while closing at an all-time high of 10,752; gaining 86 points,” First Capital added. 

It said the turnover was supported by the Diversified Financials sector followed by the Food, Beverage and Tobacco sector generating a joint contribution of 56%. 

NDB Securities said high net worth and institutional investor participation was noted in Chevron Lubricants and LOLC Holdings. Mixed interest was observed in Expolanka Holdings, R I L Property and ACL Cables, whilst retail interest was noted in Lanka Orix Finance, Panasian Power and Browns Investments. 

Diversified Financials sector was the top contributor to the market turnover (due to Lanka Orix Finance and LOLC Holdings), whilst the sector index gained 3.52%. The share price of Lanka Orix Finance increased by Rs. 4 (15.27%), closing at Rs. 30.20. The share price of LOLC Holdings appreciated by Rs. 29.25 (4.22%), closing at Rs. 722.

Food, Beverage and Tobacco sector was the second-highest contributor to the market turnover (due to Browns Investments) whilst the sector index decreased by 0.15%. The share price of Browns Investments moved up by 10 cents (0.87%), closing at Rs. 11.60.

Expolanka Holdings and R I L Property were also included amongst the top turnover contributors. The share price of Expolanka Holdings gained Rs. 7 (3.58%) to close at Rs. 202.75. The share price of R I L Property recorded a gain of 70 cents (4.83%) to close at Rs. 15.20.

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