No cheer from investors despite bell ringing by Ranil

The significant development of Premier Ranil WIckremesinghe ringing the market opening bell yesterday apparently failed to cheer investors as the Colombo Stock Exchange closed with both indices down.

The All Share Index was down 32 points and S&P SL 20 Index was lower by 14 points. A redeeming feature however was the strong turnover of Rs. 1.6 billion, which was above this year’s daily average of Rs. 1.1 billion, and heavy foreign activity on premier blue chip JKH including a small net foreign inflow.

The ASPI closed in red for the sixth consecutive day and languished yesterday at eight-month low. 

Benchmark index advanced to 6,906 mark in the opening hours but failed to continue the momentum to close at 6,862.79, down by 32.40 index points or 0.47%. 20-scrip S&P SL index shed 13.59 index points (0.37%) to end at 3,637.75,” Lanka Securities said.

Foreign turnover was concentrated mainly in John Keells Holdings with 7.1 million shares traded for Rs. 1.28 billion. Total foreign purchases accounted for 84.1% of turnover.

NDB Securities said the ASI dip was a result of price losses in counters such as John Keells Holdings, Ceylinco Insurance and Lanka IOC. High net worth and institutional investor participation was witnessed in John Keells Holdings.

Reuters said the market fell led by banking and diversified stocks on worries earnings of financial firms would be hit after the new budget proposals announced were implemented.

“Sentiment was also hurt after Prime Minister Ranil Wickremesinghe warned of lower economic growth in 2016 due to the global slowdown,” Reuters added.

The index fell to its oversold territory with the 14-day Relative Strength Index at 27.625 versus Tuesday’s 30.676, Reuters data showed. A level of 30 or below indicates the market is oversold.

“Market is down on banks and banks are down on taxes,” Dimantha Mathew, Research Manager at First Capital Equities was quoted as saying by Reuters. 

It said rating agency Fitch last week said that Sri Lanka’s 2016 Budget provides no clear plan for fiscal consolidation over the medium term and the absence of such a framework will put more pressure on the fiscal deficit.

The Government on 20 November announced a raft of steps, including the removal of a 0.3% share transaction levy, to stimulate trading in the share market and increase liquidity.

Foreign investors, who have been net sellers of Rs. 3.55 billion worth of shares so far this year, were net buyers for a third straight session with purchases of Rs. 21.3 million.