ECONOMYNEXT – Sri Lanka stocks gained over 2 percent to end at more than one week high on Thursday in dull trade as investors eyed beaten-down shares, but the sentiment was dull, brokers said.
The main All Share Price Index (ASPI) rose 2.32 percent or 199.26 points to close at 8,602.97, it’s highest since October 19. The index hit its lowest close since August 9 on Tuesday.
“There was nothing much in the market apart from day traders buying into dropped shares,” a market analyst said.
The market saw net foreign inflows of 193 million rupees. The total net foreign inflow so far for this year is 18.3 billion rupees.
Investors are on a wait-and-see approach amid speculation on the government introducing more taxes while selling pressure was driving the market down, analysts say.
The 2023 budget will be presented in the parliament on November 14.
The more liquid index S&P SL20 closed 2.64 percent or 68.88 points higher at 2,677.03.
The market saw a turnover of 1.3 billion rupees, near its lowest since August 9 and lower than this year’s average turnover of 3.1 billion rupees.
The index has lost 11.3 percent so far this month and 28 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.
Many Sri Lankan firms showed good results in the June quarter helped by lower-cost inventory and the ability to increase prices as inflation soared.
Since then utility prices are up and workers have started to get restive demanding higher wages, while concerns are emerging about purchasing power. Economies (and firms) generally begin to feel the negative effects of money printing when inflation ceases to accelerate.
There are, however, concerns over December-quarter earnings.
Following the tax hike proposals, stockbrokers said that the market has become bearish as investors moved to a wait-and-see approach as they expect the move to hit the fourth-quarter earnings.
The analyst said the market will be bearish for some time until interest rates comes down.
Shares have been on a falling trend following the proposed tax hikes that were gazetted early this month with companies expecting their profits to decline as the increased taxes are likely to reduce the disposable income of the general public, dealers said.
Aitken Spence, leafing the index gain, closing 10 percent higher at 194.5 rupees a share.
Browns Investment rose 9.3 percent to 132 rupees a share while LOLC closed 6.7 percent stronger at 414.7 rupees a share. (Colombo/Oct27/2022)