Colombo stock market reverts to negative territory despite President’s assurances

The Colombo stock market reverted to negative territory yesterday despite reassurances from the President as well as the Central Bank on the recovery of the economy.

The active S&P SL20 dipped by 2.33% and the benchmark ASPI by 1.5%. Turnover was Rs. 2.86 billion involving 111 million shares.

After losing over Rs. 300 billion in value in the first two market days of October, the Colombo bourse staged a half-hearted recovery on Wednesday to close marginally up. 

Yesterday’s relatively sharp dip was of concern for analysts as it happened whilst President Ranil Wickremesinghe in yet another speech in Parliament detailed various efforts taken to address the unsustainable external debt issue as well as revive the economy. The Central Bank also kept policy rates unchanged after assessing the current and expected macroeconomic developments.

Asia Securities said the indices moved downwards throughout the session as retail selling returned in EXPO, LIOC, and LOLC group dampening the recovery momentum seen on Wednesday. 

The indices closed at a six-week low with the ASPI reaching 9,182 (-137 points) and the S&P SL20 index hitting 2,820 (-67 points). 

Turnover was supported by LIOC (Rs. 514 million), TAP (Rs. 493 million), and CIC (Rs. 210 million). Price losses in LIOC (-4.6%), EXPO (-4.2%), LOLC (-3.7%), LOFC (-5.0%), and ACL (-3.4%) closed sharply lower while price increases in CIC (+6.4%), AGST (+6.5%), SUN (+4.0%), SLTL (+14.4%), and TKYOX (+3.5%) supported the ASPI to some extent during the session. The breadth of the market turned negative with 51 price gainers and 147 decliners.

Asia also said foreigners recorded a net inflow of Rs. 62.7 million with net foreign buying most in in CIC.N at Rs. 47 million and selling in LIOC at Rs. 6.5 million.

First Capital said the ASPI reverted back to the red zone as selling pressure mounted after comments from the President over the country's inflation dragged down the investor sentiment. Further, as FCR predicted, policy rates were maintained at the Monetary Policy Meeting causing deeper wounds to the investor sentiment. 

First Capital also said Index opened on an upbeat note but regressed to red afterwards as selling pressure took charge as investors resorted to profit booking in retail favourite LIOC and EXPO. Moreover, Banking sector shares plunged today after the President commented on the imposition of a deposit rate cap in a move to tackle rising inflation. 

NDB Securities said high net worth and institutional investor participation was noted in John Keells Holdings, Expolanka Holdings and ACL Cables. Mixed interest was observed in Lanka IOC, Ambeon Capital and CIC Holdings whilst retail interest was noted in Browns Investments, SMB Leasing and First Capital Holdings. 

Consumer Durables and Apparel sector was the top contributor to the market turnover (due to Ambeon Capital) whilst the sector index lost 3.07%. The share price of Ambeon Capital lost Rs. 2.50 (16.89%) to close at Rs. 12.30.

Energy sector was the second highest contributor to the market turnover (due to Lanka IOC) whilst the sector index decreased by 3.99%. The share price of Lanka IOC decreased by Rs. 11 (4.57%) to close at Rs. 229.50. 

CIC Holdings (voting and nonvoting) and Expolanka Holdings were also included amongst the top turnover contributors. The share price of CIC Holdings voting moved up by Rs. 5.50 (6.41%) to close at Rs. 91.30, whilst the share price of CIC Holdings nonvoting appreciated by Rs. 2.90 (4.53%) to close at Rs. 66.90. The share price of Expolanka Holdings recorded a loss of Rs. 7.50 (4.25%) to close at Rs. 169.00.