ECONOMYNEXT – Sri Lanka’s main stock index gained 1.87 percent to a fresh record high on Thursday (26), rising for a fourth straight session as investors bet on market heavyweights amid a lockdown, brokers said.
The index touched 8,922.69 points, its record intraday high, before retreating to an all-time high of close at 8,920.71 with 164.08 points gain for the day.
The S&P SL20 index of more liquid stocks gained a whopping 4.95 percent or 157.47 points to close at 3,341.20.
“Investors are bullish about the market. Expolanka is gaining because of its expected dollar earning as many of its businesses are out of the country,” said a stockbroker asking not to be named.
“But with the central bank’s interest rate hike is a red alert. We expect the rates to go up by further and the market to see a sharp correction around December.”
Stocks have been on the rise partly due to record low-interest rates, excess liquidity in money markets, and some businesses being disrupted due to import controls triggered by money printing.
The trend of net foreign selling has been continuing since early last year.
Analysts expect a market correction soon when the central bank’s tightening measures start to bite. The central bank raised its key policy rates by 50 basis points last week. It also has raised commercial banks’ Statutory Reserve Ratio (SRR) by 2 percent with effect from Sept. 1
The day’s turnover was 10.4 billion rupees, well over this year’s average daily turnover of 3.9 billion rupees.
Stockbrokers have said the market is on the rise this week with heavy turnover mainly because investors hardly have other options during a 10-day lockdown which has been imposed through August 30.
Sri Lanka’s pandemic situation has been worsening with COVID-19 daily death toll has been recording a fresh record high in most of the days in the last week.
The gain was led by Expolanka Holdings Hayleys Plc and LOLC Holdings.
Expolanka Holdings which has a significant export component in its business gained 105.3 points out of the 164.08 points. It gained 24.00 rupees or 19.55 percent to close at 150.75 rupees.
Hayleys gained 13.45 rupees or 14.57 percent to close at 109.00 rupees a share and LOLC Holdings gained 18.50 rupees to close at 528.00 rupees a share.
Foreign investors, sold a net 238 million worth of shares on Wednesday, and the market has suffered a net foreign outflow of over 37.06 billion rupees so far this year.
The bourse saw 111 stocks gaining against 90 falling on Wednesday. (Colombo/August26/2021)