ECONOMYNEXT – Sri Lanka shares gained on Wednesday after slipping for four sessions on the speculation of interest rates easing as T-bill auction yields fell for second week straight.
“Bourse edged up after four days of being in the red zone as investor confidence slightly improved over the expectation of an economic recovery from 2H2023, as stated by the CBSL in the policy report for 2023,” First Capital Market Research said in it’s daily note.
“It is also noted that inflation is expected to gradually decelerate in the 1H2023 and is likely to reach the desired level towards the end of 2023.”
Treasury counters too had moved up on the anticipation that interests would ease.
At the weekly T-bills auction, the debt office offered and sold 88 billion rupees with all maturities being fully subscribed and yields easing for second week straight.
The 3-months bills fell 86 basis points while the 6-months maturity fell 65 basis points.
The long term one-year maturity fell 12 basis points.
The main All Share Price Index (ASPI) closed at 0.16 percent or 13.18 points higher at 8,380.87
However, the government has decided to cut down expenditure as the financial crisis was worser than they expected it to be.
Market has been falling since the year started due to the proposed 65 percent electricity tariff hike while the government also hiked various excise duties.
The most liquid index S&P SL20 closed 0.17 percent or 4.4 points lower to 2,560.95.
First quarter of 2023 is expected to be negative with the taxations going in to effect from January 1st and there are talks of a hike in electricity tariffs, which has gained Cabinet approval and is waiting for recommendations by the Public Utilities Commission of Sri Lanka.
Whereas the second quarter was expected to be more positive with the anticipation of IMF getting through and with the interest rates expected to ease as the taxes starts to generate funds.
Sri Lanka is expecting a further contraction in the economy after a negative growth in 2022, Cabinet Spokesperson Bandula Gunawardena said at the Weekly Cabinet Press Briefing.
The market witnessed a turnover of 1.3 billion rupees, lower than this month’s 2.1 billion rupees average daily turnover. It is also comparatively much lower than 2022’s daily average turnover of 2.9 billion rupees.
The market saw a net foreign outflow of 12 million rupees. The net foreign inflow for the first seven session of January is 80 million rupees. The total foreign inflow of 2022 was 31 billion rupees.
WindForce pushed the index up to close at 9.5 percent higher at 17.3 rupees.
Melstacorp gained 2.2percent to close at 47 rupees and Hatton National Bank closed 1.9 percent higher at 77 rupees a share. (Colombo/Jan11/2023)