• Improved investor sentiment following multiple stakeholder initiatives and comments boost indices by 4%

The Colombo stock market yesterday powered its way to a strong rise thanks to confidence boosting by investors and policy makers.

The All Share Price Index (ASPI) gained by 264 points or 3.7%, whilst the S&P SL20 shot up by 4% or 115 points. However, turnover was below par at Rs. 2.7 billion. The latter reflects most investors were adopting a wait-and-see attitude, though sentiment of those investing was optimistic.

Yesterday's sharp rise pushed ASPI back closer to double digit year-to-date gain (8.03%), whilst S&P SL20 has crossed the mark at 10.18%. The indices ended January 2021 with 30% gain. 

Blue chips LOLC, Expolanka and Vallibel One were major contributors to ASPI's gain with 23 points and 18 points each respectively. Browns Investments and Distilleries also chipped in.  

Thanks to sharp rise in the indices, the market capitalisation shot up by Rs. 240 billion yesterday, thereby reducing the loss of value since end January 2021 to Rs. 465 billion, as opposed to Rs. 705 billion as of Friday. 

The strong revival yesterday comes after initiatives and comments from various capital market stakeholders since Friday, including by Money, Capital Markets and State Enterprises Reform State Minister Nivard Cabraal (via his tweets and meetings investors), group of high net worth individual investors (making representations to State Minister Cabraal), the Securities and Exchange Commission (meeting brokers) and the Colombo Stock Exchange (removing a contentious circular) and the Colombo Stock Brokers Association (CSBA) for its continuous lobbying on the best way forward.

First Capital said Bourse started the week reverting the direction back to positive, recording a near one-week high, while experiencing the highest intraday gain almost after one month. 

“Index witnessed a strong uptrend since the beginning of the session and closed at 7,318, gaining a massive 264 points,” it said. 

The Capital Goods sector led the turnover for the session followed by the Materials sector making a joint contribution of 48%. 

NDB Securities said high net worth and institutional investor participation was noted in Seylan Bank non-voting. Mixed interest was observed in Haycarb, Hayleys and ACL Cables, whilst retail interest was noted in Dipped Products, Expolanka Holdings and Vallibel One. 

The Capital Goods sector was the top contributor to the market turnover (due to John Keells Holdings), whilst the sector index gained 5.33%. The share price of JKH appreciated by Rs. 1.25 (0.84%) closing at Rs. 150, whilst foreign holdings decreased by 1,133,765 shares.

The Materials sector was the second highest contributor to the market turnover (due to Dipped Products), whilst the sector index increased by 7.88%. The share price of Dipped Products gained Rs. 6.80 (15.70%) to close at Rs. 50.10.

Expolanka Holdings, LOLC Holdings and Browns Investments were also included amongst the top turnover contributors. The share price of Expolanka Holdings increased by Rs. 4.10 (9.26%) to close at Rs. 48.40. The share price of LOLC Holdings moved up by Rs. 21.25 (6.93%) to close at Rs. 328.00. The share price of Browns Investments recorded a gain of Rs. 0.40 (7.69%) to close at Rs. 5.60.

Net foreign selling yesterday amounted to Rs. 261 million, as against Rs. 273 million on Friday. The year-to-date net outflow is Rs. 14.7 billion. Asia Securities said estimated net foreign buying topped in DIAL at Rs. 6.3 million and net foreign selling topped in JKH at Rs. 170 million.

Capital Trust said with renewed optimism in the market, it expects the Bourse to continue its upward momentum supported by sanguine investor interest and tailwind support from the low interest rate environment. “In this respect, we advice investors to be appropriately positioned in fundamentally robust stocks that are expected to outperform over the longer term,” it added.

Contentious circular withdrawn; SEC, CSE and brokers meet to discuss way forward