SC Securities first and bold to predict stock market upturn post AKD-election

Leading broking firm SC Securities and the Daily FT joint initiative “Market Pulse” was first and bold enough to predict a Colombo stock market upturn as opposed to fear and panic post-election prompting few other brokers’ sell call.

Since May to 2024 Presidential election date, the stock market had dipped by 16% and as the crucial polls neared most investors were fearful of the outcome. 

A week before the Presidential election’s outcome was known, the SC Securities-Daily FT joint initiative “Market Pulse” interview series on YouTube on 16 September (https://www.youtube.com/watch?feature=shared&v=bqFpdjMIDD4) tackled the most pressing question “Navigating market volatility: Is it time to buy.”

Responding to this and several other pertinent questions were SC Securities Assistant General Manager Saliya Gamagedera who counts 33 years’ of experience, and SC Securities Manager - Sales Laurence David, who brings 38 years of experience in the industry and specialises in both technical and fundamental analysis. The interview was conducted by SC Securities Senior Sales Manager M. Miflal. 

David admitted panic and fear in the market led to 16% drop and despite strong fundamentals and economic indicators, this fear-driven reaction took over. “However, this uncertainty can also be seen as a gift to the market. A 16% drop presents opportunities for savvy investors. While political decisions remain, the economy is on the right path. The market has offered a discount, which can be seen as a blessing. Now is the time to seize the opportunity,” he said.

Saliya emphasised, “Discounts are your allies. When there’s a discount, it presents an opportunity to capitalise on future rewards.”

The duo pointed out the anxiety in the market was not truly reflective of the underlying valuations. As a result, when prices offer a discount, the risk is reduced beyond the valuations assigned to these companies. This creates an opportunity for savvy investors to enhance their returns. Understanding the discount factor in the market and capitalising on it based on individual strategies presents a clear opportunity for growth.

Saliya said in the pre-election interview that anyone coming into power now has to take the economy from point A to point B. But when fear sets in, people start imagining worst-case scenarios, which leads to irrational decisions. A mature investor, however, won’t be swayed by this fear. They’ll focus on the opportunities, always looking for bargains in the market rather than reacting emotionally. That reflects the current situation. 

The present moment offers another incredible opportunity. Bold investors, as risk-takers, must analyse risks carefully, knowing their side of the story. Success varies by individual, and just because one investor profits doesn’t guarantee another will—it’s up to each investor to decide and seize the rewards.

The duo said as investors, it’s crucial to understand what this fear is really about. We’re dealing with the stock market—a place inherently tied to risk, and we need to be aware of that risk. If we don’t fully understand the risks involved, it will be difficult to succeed as investors. The key lies in knowledge—specifically, understanding valuations. If you know how to assess value, even something as basic as net asset value (NAV), you’re already ahead.

 “It’s an ideal moment for traders to start buying, as high-net-worth investors and accumulators are absorbing volumes. Once retailers join in, prices will likely rise. Whether we like it or not, this is the natural behaviour of the market. This is the right time to invest. The market is poised for take-off,” the SC Securities experts emphasise. See full interview on page 6.