IMF announcement boosts CSE to highest day gain in 3 months

The International Monetary Fund (IMF) announcement of reaching Staff Level Agreement with Sri Lanka on the first review of the 

$ 3 billion EFF deal despite two contingents, boosted the Colombo stock market yesterday to achieve the highest day gain in three months.

The active S&P SL20 shot up by 3.3% yesterday whilst the benchmark ASPI gained 2.46%. 

The rebound in sentiment was sharp considering the fact that S&P SL had declined by 8% in the first 13 days of October and ASPI by 7%.

Friday’s surge helped the CSE to close the week on the up - ASPI ended with a 38-point gain (0.35%) and the S&P SL20 edged 8 points (0.27%). Last week ASPI dipped by 1.6% and S&P SL20 by 1.9%.

Turnover yesterday however was below the Rs. 1 billion mark at Rs. 910 million involving 36.6 million shares. Average daily turnover this was Rs. 1 billion, slightly higher from Rs. 972 million in the previous week.

Asia Securities said after consecutive sessions of subdued momentum, the market rebounded strongly, on Friday as investor sentiment improved following the successful completion of the IMF Staff Level Agreement.

Following a period of pullback, banking stocks staged a strong recovery with the sector index picking up 6.0% for the day. SAMPN (+8.6%), COMBN (+6.2%), COMBX (+6.9%), HNBN (+4.0%), HNBX (+4.6%), DFCC (+5.1%), PABC (+6.6%), NDBN (+5.0%), NTBN (+4.3%), SEYBN (+6.4%), and SEYBX (+7.2%) led the rally in the market during the session. In addition, LFIN (+1.6%) saw renewed investor interest underpinned by the company’s better-than-expected 2Q FY24 earnings. SLTL (+5.2%) and LHCL (+5.5%) continued to scale upwards while FCT dipped 23% on account of the company’s dividend XD date.

SAMP (+41 points) came in as the major index driver for the day, followed by COMBN (+31 points), and HNBN (+20 points). Overall, 157 stocks ended in green while 30 closed with losses.

Asia also said foreigners recorded a net outflow of Rs. 35.9 million. Net foreign buying topped in JKH at Rs. 16.3 million and selling topped in SAMP.N at Rs. 16.3 million.

First Capital too said the market exuded investor optimism following the official announcement of Sri Lanka’s successful agreement with the IMF staff-level agreement for the conclusion of the 1st review of the 48-month Extended Fund Facility-supported program, which would pave the way for the 2nd tranche.

“In the wake of this, the market sentiment picked up with the bourse closing firmly in the green at 10,851, gaining 260 points, nearly 3 months after it surged by over 270 points back in July 2023,” First Capital said.

It said the banking sector emerged as a top contributor during the day, as its current undervaluation drew attention, and the signing of the staff-level agreement indirectly hinted at the progress of Sri Lanka’s external debt restructuring. FCT experienced the biggest loss of the day, shedding 23%, primarily due to its XD date. LFIN witnessed revitalised investor interest after reporting a profit of Rs. 2.3 billion (+15.9%YoY). Market turnover was led by the Diversified Financials and Banking counters which jointly contributed 46% to the overall turnover.

NDB Securities said high net worth and institutional investor participation was noted in John Keells Holdings, Sampath Bank and LB Finance. Mixed interest was observed in First Capital Treasuries, First Capital Holdings and Capital Alliance whilst retail interest was noted in Browns Investments, UB Finance Company and LOLC Finance.

The Diversified Financials sector was the top contributor to the market turnover (due to First Capital Treasuries, First Capital Holdings and LB Finance) whilst the sector index gained 0.45%. The share price of First Capital Treasuries lost Rs. 9.50 to Rs. 31.60. The share price of First Capital Holdings moved up by Rs. 1.10 to Rs. 52. The share price of LB Finance recorded a gain of one Rupee to Rs. 620.

The Banking sector was the second highest contributor to the market turnover (due to Sampath Bank) whilst the sector index increased by 6.00%. The share price of Sampath Bank appreciated by Rs. 5.20 to Rs. 65.70.

John Keells Holdings was also included amongst the top turnover contributors. The share price of John Keells Holdings increased by 25 cents to Rs. 191.25.

Separately Lanka Hospitals announced an interim dividend of Rs. 1.50 per share.