Stock market gains by over 2% on IMF deal; net foreign buying persists

The Colombo stock market yesterday gained by over 2% on healthy turnover and net foreign buying in an overall positive development linked to the Government reaching Staff-Level Agreement  with the International Monetary Fund on a four-year $ 2.9 billion worth Extended Fund Facility.

The active S&P SL20 gained by 2.6% and the benchmark ASPI by 2% sustaining the momentum from early this week and opening the new month September positively. Turnover was Rs. 4 billion involving 151 million shares.

Asia Securities said the indices continued their upbeat momentum to start the month of September on the front foot as retail and HNI investors engaged in broad-based buying, buoyed by the positive developments on the macro front. 

It said the announcement of the $ 2.9 billion Extended Fund Facility (EFF) from the IMF, including structural reforms targeted at achieving debt sustainability and narrowing financial gaps, boosted investor appetite for particular stocks and sectors during the session. 

Leading the rally in the ASPI, front-line stocks LIOC (+7.4%), EXPO (+2.1%), MELS (+4.5%), SAMP (+7.5%), and LOFC (+2.7%) ended sharply higher while plantation stocks CIC.N (+6.4), CIC.X (+8.9%), KVAL (+5.3%), KAHA (+8.4%), and MASK (+9.6%) continued their recent upward trend. 

Turnover was led by LIOC (Rs. 736 million), EXPO (Rs. 557 million), MELS (Rs. 250 million), and LDEV (Rs. 138 million). Asia also said foreigners remained on the buying side, generating a net inflow of Rs. 128 million led by EXPO (Rs. 341 million) while MELS drove foreign selling, totaling a net outflow of Rs. 112 million. 

The ASPI commenced the session surpassing the 9,200 level on the back of a 163-point gap-up and trended towards the 9,300 level in the first hour of trading. After hitting a high of 9,310 (+239 points or +2.6%), the index consolidated in the range of 9,250-9,270 at the back end of the session. The breadth of the market remained strong with 158 stocks recording price gains and 61 closing in red. 

First Capital said the bourse continued to rally with a substantial gain of 183 points following the announcement of the staff-level agreement with IMF with a 48-month arrangement under the EFF of $ 2.9 billion. 

“In response to that, the index shot up by over 150 points as soon as the market opened as investors took positions and traded on index heavy weights. Moreover, LIOC and plantation stocks continued to be the retail favourite as the index closed the day at a five-month high of 9,255,” First Capital said. 

Turnover was driven by active retail participation. Similarly, Food, Beverage and Tobacco and Energy sectors continued to lead the market turnover with a joint contribution of 47%.

NDB Securities said high net worth and institutional investor participation was noted in Expolanka Holdings, Kelani Valley Plantations and Ceylon Cold Stores. Mixed interest was observed in Lanka IOC, Melstacorp and CIC Holdings whilst retail interest was noted in Kotagala Plantations, Industrial Asphalts and Browns Investments. 

Food, Beverage and Tobacco sector was the top contributor to the market turnover (due to Melstacorp and Lankem Developments) whilst the sector index gained 1.19%. The share price of Melstacorp moved up by Rs. 2.40 (4.46%) to close at Rs. 56.20. The share price of Lankem Developments recorded a loss of 60 cents to close at Rs. 30.

Energy sector was the second highest contributor to the market turnover (due to Lanka IOC) whilst the sector index increased by 6.81%. The share price of Lanka IOC increased by Rs. 13.25 (7.39%) to close at Rs. 192.50. 

Expolanka Holdings and CIC Holdings were also included amongst the top turnover contributors. The share price of Expolanka Holdings gained Rs. 4.50 (2.08%) to close at Rs. 221.25. The share price of CIC Holdings appreciated by Rs. 4.40 (6.44%) to close at Rs. 72.70.

Separately, Myland Developments announced a final dividend of 25 cents per share.