ECONOMYNEXT – Sri Lanka shares gained for the first time in seven straight session and recovered from a near four-month low on Tuesday (22) on a bargain hunting in beaten down shares ahead of the 2023 budget vote, brokers said.
Budget, after the market closed, was based with a 37 majority vote in the 225-member parliament.
The main All Share Price Index (ASPI) closed 2.8 percent or 223.42 points higher at 8,000.44, recovering from its near four-month low hit on the previous session.
In the last six-session through Monday, the index fell 7.6 percent.
“Index started on a solid footing and maintained its steep upward trajectory as buying infused with the speculations on policy easing from the upcoming policy meeting which scheduled to be held on 24th Nov.,” First Capital Market Research said in its daily market note.
Analysts said with the inflation easing for the first time in the last month, the central bank might consider some action to ease its tight monetary policies.
In the past sessions, the index continued to fall on the speculation of a local debt restructuring although no proper decision has been taken.
State Minister for Finance Shehan Semasinghe told parliament during the budget debate on Tuesday that Sri Lanka still believed its economic plan required no domestic debt re-structure as interest rates remained elevated over fear of a rupee debt default.
The budget saw policies that will increase the cost of doing business across the board, but relieving the government from depending on excess money printing, analysts say.
The market witnessed a turnover of 1.5 billion rupees, half of this year’s daily average turnover of 3 billion rupees.
The market saw a foreign inflow of 116 million rupees, extending the total net foreign inflow to 18.3 billion rupees so far for this year.
Analysts said a bearish sentiment can be expected in the banking and financial sector until a clear direction is given by the government on local debt restructuring.
The more liquid index S&P SL20 closed 3.7 percent or 88.4 points higher at 2,454.96.
The ASPI has fallen 6.9 percent so far in November after losing 13.4 percent in October.
It has lost 34.5 percent year-to-date after being one of the world’s best stock markets with an 80 percent return last year when large volumes of money were printed.
Expolanka led the market gain and jumped 11 percent to close at 138.7 rupees a share.
Lanka IOC rose 13 percent to close at 178 rupees, while Ceylinco insurance gained 7.5 percent at 2,100 rupees.
The listed companies have shown reasonable profits in their third quarter of the year, however, analysts say the disposable income of the general public due to proposed tax hikes is the main reason for the negative expectations over the December earnings. (Colombo/Nov22/2022)