Colombo stock market gains on all fronts

• Achieves highest single-day gain in two weeks; ASPI reverts to 9,000-point level
• ASPI ends August with 17.3% gain, S&P SL20 by 19.6%
• Fresh Rs. 697 m net foreign inflow helps end August with nearly Rs. 1 b of net buying and takes YTD figure to Rs. 550 m positive for first time this year
• Aitken Spence and Expolanka pick off of foreign investors
• Analysts link upturn to reforms-heavy Budget and finalisation of SLA with IMF

The Colombo stock market gained sharply on all fronts including net foreign inflow.

Analysts attributed the market›s upturn to positive investor sentiment to reforms-driven interim Budget presented by President Ranil Wickremesinghe on Tuesday and finalisation of the Staff-Level Agreement with the International Monetary Fund (IMF). 

Both indices the ASPI and S&P SL20 gained by 2.3% and turnover jumped to Rs. 4.2 billion involving 135 million shares. 

In August, the ASPI and the S&P SL20 gained 17.3% and 19.6% respectively whilst recording an average daily turnover of Rs. 3.51 billion. Year to date however, the ASPI is down 26% and S&P SL20 by 31%.

Asia Securities said indices recorded their biggest single-day gain in two weeks as retail and HNI investors resumed their buying spree across sectors, after maintaining a “wait-and-see” approach in the days leading to the budget with the expectation of stricter tax measures. 

However, the market participants reacted positively to the budget reading as the proposals are expected to have minimal impact on corporates and the capital market as a whole. 

“This, along with an impending IMF Staff Level Agreement, strengthened investor sentiment today, resulting in a sharp pick up in turnover to Rs. 4.3 billion from Rs. 1.8 billion,” Asia said. 

Earlier, the ASPI opened trading on a high note, surpassing the 9,000 level with a strong gap-up of 135 points and stabilised in the range of 9,050-9,100 over the course of the session. The index closed out with a gain of 206 points with SPEN contributing the most (32 points), followed by MELS (26 points), HAYL (19 points), and LIOC (14 points). 

On the activity front, SPEN generated the highest turnover for the day (Rs. 950 million), followed by EXPO (Rs. 507 million), LIOC (Rs. 363 million), and LDEV (Rs. 253 million). 

“Importantly, foreign activity improved significantly during the session resulting in a sizeable net inflow of Rs. 697 million led by SPEN (Rs. 596 million) and EXPO (Rs. 340 million) while COMB topped net foreign outflow at Rs. 204 million. Foreign participation increased to 15.1% of turnover (previous day 7.8%).

With yesterday’s net foreign flow, the YTD foreign flow has now turned positive for the first time this year, standing at Rs. 550 million. The CSE also saw August finishing with a net inflow of Rs. 934 million. 

The breadth of the market continued strong with 146 price gainers and 61 decliners.

First Capital said the bourse thrived in green following Tuesday’s budget reading which was taken positively by the market participants while soon expecting confirmation from the IMF further reinforced investor confidence. 

The market opened on an optimistic note as investors avidly collected on Plantation and export-oriented counters favoured by the interim budget. Renewed buying interest was visible on retail favourite LIOC. 

Index moved in an uptrend throughout the session and closed positively at 9,071 gaining 206 points. As retail participation built up, turnover strongly improved (up 21%  from monthly average turnover of Rs. 3.5 billion) led by the Capital Goods and Food, Beverage and Tobacco sectors which collectively contributed 52% to the overall turnover. 

NDB Securities said high net worth and institutional investor participation was noted in Expolanka Holdings, Commercial Bank and Aitken Spence. Mixed interest was observed in Lanka IOC, Hayleys and Kotagala Plantations whilst retail interest was noted in Agstar, Browns Investments and Lankem Developments. 

The Capital Goods sector was the top contributor to the market turnover (due to Aitken Spence) whilst the sector index gained 3.40%. The share price of Aitken Spence increased by Rs. 18.25 (13.98%) to close at Rs. 148.75.

Food, Beverage and Tobacco sector was the second highest contributor to the market turnover (due to Lankem Developments) whilst the sector index increased by 2.67%. The share price of Lankem Developments recorded a gain of Rs. 3.50 (12.92%) to close at Rs. 30.60.

Expolanka Holdings, Lanka IOC and Commercial Bank were also included amongst the top turnover contributors. The share price of Expolanka Holdings lost Rs. 2 (0.91%) to close at Rs. 216.75. The share price of Lanka IOC moved up by Rs. 10.75 (6.38%) to close at Rs. 179.25. The share price of Commercial Bank appreciated by Rs. 0.10 (0.19%) to close at Rs. 51.90.

Separately Luminex announced a final dividend of 40 cents per share.