CSE suffers second consecutive week of losses post-Budget

• Turnover dips to one month low, indices up marginally on Friday despite boost to equities from policy rate cut

The Colombo stock market suffered its second consecutive week of losses post-2024 Budget presentation by President and Finance Minister Ranil Wickremesinghe as the positives reiterated by Government MPs in Parliament have failed to convince equity investors. 

The benchmark ASPI lost 86.18 points (0.81%) during the week while the S&P SL20 lost 14.93 points (0.50%). 

The losses however were far less than last week when the indices declined by over 2%. 

However average daily turnover improved to Rs. 1 billion up from Rs. 834 million on account of multiple crossings.

Asia Securities said the market concluded a week of subdued activity with lacklustre momentum as investors stayed on the sidelines, assessing market sentiment following the 100 bps CBSL policy rate cut. With private sector credit growth picking up gradually as a result of the CBSL’s policy rate adjustments, we expect today’s policy rate cut to reduce borrowing costs further, leading to increased economic activity. The Board has notably signalled a temporary halt to further monetary policy easing in the near future. The CBSL anticipates that the second tranche from the IMF will be disbursed after the completion of external debt restructuring by the end of the year. Approval for the release of the second tranche is expected to be considered by the IMF Executive Board during their upcoming meeting on 6 December 2023. 

CALT (-1.8%), CFVF (-2.0%), LIOC (-1.0%), FCT (-1.9%), and ACL (-2.0%) ended in red while DIPD (+2.9%), VFIN (+3.0%), TKYON (+3.0%), and KHL (+1.0%) edged higher in an otherwise moderate session.

The ASPI moved in the range of 10,520-10,560 throughout the session with limited retail and HNI participation resulting in a one-month low turnover of Rs. 430 million (previous session-LKR 812 million). 

Asia also said foreigners recorded a net inflow of Rs. 34.5 million. Net foreign buying topped in SAMP.N at Rs. 11.5 million and selling topped in PLR at Rs. 3.8 million.

First Capital said the ASPI exhibited a marginal gain of 4 points, closing the day with little change, primarily due to a lack of investor participation on concerns regarding the second tranche of the IMF EFF. In the early trading hours, the Monetary Board’s decision to reduce rates by 100 basis points generated initial interest in Treasury and Banking counters. Nevertheless, this positive momentum was short-lived as investors opted to realise profits on selected Banking counters. 

ASIR and CARG also counteracted gains during the session due to increased selling interest. However, the index see-sawed from red to green before ultimately concluding the day at 10,527, with a modest gain of 4 points. 

NDB Securities said High net worth and institutional investor participation was noted in Hayleys, Distilleries and John Keells Holdings. Mixed interest was observed in Capital Alliance, First Capital Holdings and Lanka IOC whilst retail interest was noted in First Capital Treasuries, Prime Lands Residencies and Browns Investments. 

The Diversified Financials sector was the top contributor to the market turnover (due to Capital Alliance and First Capital Holdings) whilst the sector index gained 0.52%. The share price of Capital Alliance decreased by one Rupee to Rs. 56. The share price of First Capital Holdings lost 60 cents to Rs. 29.90.

The Capital Goods sector was the second highest contributor to the market turnover (due to Hayleys) whilst the sector index increased by 0.25%. The share price of Hayleys closed flat at Rs. 75.

Lanka IOC and Distilleries were also included amongst the top turnover contributors. The share price of Lanka IOC recorded a loss of one Rupee to Rs. 102.75. The share price of Distilleries appreciated by 10 cents to Rs. 26.20.