ECONOMYNEXT – Sri Lanka’s main stock index hit a fresh all time high on Wednesday (01) with a 1.84 percent gain and the day’s close passed the psychological mark of 9,000 in strong turnover, brokers said.
The index soared despite the central bank’s decision to raise Statutory Reserve Ratio (SRR) by 2 percent with effect from Wednesday that mopped up 150 billion rupees from the market.
Brokers said with the beginning of new month, investors are coming strongly into the market.
“It was a broad base pick up today. Most of the shares were pushing the market up” a stockbroker said asking not to be named.
The broker said the investors tend to slow down by the end of the month due to settling of margin credits.
“Last two days the market was slow due to the month end. But with the beginning of the month, investors are strongly coming in to the market again”
However, some analysts expected a possible dip in the equity market due to the central bank’s 2 percent hike of Statutory Reserve Ratio (SRR) of commercial banks that comes to effect from Wednesday (Sept 01).
The index continued to increase throughout the day and reached its intraday record high of 9,197.08 during the trading before falling to end at an all-time high close of 9,163.13 with 165.53 points gain for the day.
The S&P SL20 index of more liquid stocks gained 2.26 percent or 75.91 points to close at 3,440.50.
An inflow from IMF’s SDR, a Chinese funding, Bangladesh Central Bank currency swap have helped boost investor sentiment.
Brokers said speculation of the country, which facing some tough economic challenges including external debt repayment, seeking an IMF debt restructuring could also boost the sentiment.
Sri Lanka Co- cabinet spokesman Ramesh Pathirana on Tuesday told reporters that the government will take a decision on whether to seek the International Monetary Fund based on future conditions.
Earlier in August the central bank raised its overnight rates and also the raised some ceilings on Treasury bill and bond auctions through which money was also printed.
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 September 1,2021.
The day’s turnover was 14.6 billion rupees, well over three times of this year’s average daily turnover of 3.9 billion rupees.
The gain was led by Expolanka Holdings, Brown Investments and Hayleys plc.
Expolanka Holdings which has a significant export component in its business gained 7.30 percent to close at 180.00 rupees.
Expolanka is currently have the highest market capitalization with 351.8 billion rupees or 8.62 percent of the total market capitalization.
Browns Investments gained 10.58 percent to close at 11.50 rupees and Hayleys Plc closed flat at 120/75 rupees a share.
Foreign investors, sold a net 848.8 million worth of shares on Wednesday, and the market has suffered a net foreign outflow of over 38.03 billion rupees so far this year.
The bourse saw 105 stocks gaining against 81 falling on Tuesday. (Colombo/September 01/2021)