Colombo stock market takes a breather post-IMF boost

The Colombo stock market appeared to have taken a breather yesterday ending its five-day winning streak despite positive development of the IMF Executive Board giving thumbs up to Sri Lanka following its first review on Tuesday.

The benchmark ASPI was down by 0.3% and the active S&PSL20 was almost flat. Turnover was Rs. 828.6 million involving 47 million shares.

Asia Securities said following four consecutive sessions of upward movement, the indices saw a brief correction as investors opted to cash in mild profits in front-line stocks capitalising on recent price increases. 

In a major boost for the market, the IMF concluded the first review within the 48-month Extended Fund Facility (EFF) of $ 3 billion. With the successful conclusion of the first review, the Government now has immediate access to a disbursement of $ 337 million. The completion of the first review has eliminated uncertainty about the second tranche, boosting confidence among market participants. After dipping to 10,781 (-93 points), the ASPI staged a recovery in the latter part of the session, ending the day moderately lower at 10,837 (-38 points). NTBN (-2.3%), LIOC (-2.0%), DFCC (-1.2%), DIST (-1.4%), TKYOX (-1.1%), SAMP (-0.4%), and COMBN (-0.6%) recorded price losses for the day. EXPO maintained its recent upward trend (+1.2%) and investors showed interest in GLAS (2.0%), BIL (2.1%), ALUM (2.4%), and CALT (1.0%) during the session. The breadth of the market was negative with 52 price gainers and 98 decliners.

Off-board transactions contributed significantly to turnover (33%) led by 5 crossings in MELS (Rs. 201 million). 

The Cargills Bank Initial Public Offering (IPO) is set to commence today with 62.5 million ordinary voting shares priced at Rs. 8 per share. The IPO window will remain open until 5 January 2024 unless oversubscribed earlier.

Asia also said foreigners recorded a net inflow of Rs. 37.4 million. Net foreign buying topped in JKH at Rs. 31.7 million and selling topped in MELS at Rs. 31.4 million.

First Capital said the ASPI retreated into negative territory, ending the 5 consecutive sessions of gains accumulating to a total of 174 points. Investors predominantly engaged in profit taking within the Banking sector, reacting to the sustained momentum in the previous weeks.

It said the Index opened on a negative note and continued on a downward trajectory falling to an intraday low of 10,780, shedding over 90 points amid significant selling pressure. However, positivity emerged among market participants as Sri Lanka secured approval from the IMF for the highly anticipated second tranche, marking the successful completion of the first review of the 48 month Extended Fund Facility (EFF). Encouraged by this development, investors, fuelled by optimism, began accumulating blue-chip stocks such as JKH while foreign participation too shifted positively. Consequently, the index managed to recover some of its morning session losses but ultimately closed in the red at 10,837, experiencing a decline of 38 points. Meanwhile, market turnover registered at Rs. 828.6 million (-8.3% cf. monthly average turnover of Rs. 903.5 million) while Food, Beverage & Tobacco (40%) along with the Banking sector (22%) accounted for a joint contribution of 62%.

NDB Securities said high net worth and institutional investor participation was noted in Melstacorp, Hatton National Bank and John Keells Holdings. Mixed interest was observed in Expolanka Holdings, Sampath Bank and Commercial Bank whilst retail interest was noted in Industrial Asphalts, SMB Leasing and Browns Investments.

The Food, Beverage & Tobacco sector was the top contributor to the market turnover (due to Melstacorp) whilst the sector index gained 0.24%. The share price of Melstacorp closed flat at Rs. 89.30.

The Banking sector was the second highest contributor to the market turnover (due to Hatton National Bank and Sampath Bank) whilst the sector index decreased by 75 cents. The share price of Hatton National Bank moved up by Rs. 24 to Rs. 168. The share price of Sampath Bank declined by 30 cents to Rs. 73.

Expolanka Holdings and John Keells Holdings were also included amongst the top turnover contributors. The share price of Expolanka Holdings gained Rs. 1.75 to Rs. 146.75. The share price of John Keells Holdings recorded a gain of 75 cents to Rs. 192.75.