ECONOMYNEXT – Sri Lanka’s main stock index fell 0.21 percent on Friday (03) due to profit-taking after recording a fresh all-time high throughout the week, brokers said.
But foreign investors sold a net 1.5 billion worth of shares and analysts cited currency fall for the move. Foreign investors sold a net1.5 billion rupees worth of shares on Friday, and the market has suffered a net foreign outflow of over 40.4 billion rupees so far this year.
“The indices snapped their three-day record-breaking rally today closing slightly lower as investors opted to book profits mildly ahead of the weekend,” a broker said.
The index gained throughout the week despite analysts’ expectations of a possible correction in the risky assets due to the central bank’s 2 percent hike of Statutory Reserve Ratio (SRR) of commercial banks effective from Wednesday (Sept 01).
The index gained above 9,400 within minutes into trading but pulled back immediately and remained volatile throughout the day to settle at 9,309.44.
The S& P SL20 index of more liquid stocks is down 0.18 percent or 6.13 points to close at 3,494.76.
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.
An inflow from IMF’s SDR, Chinese funding, and Bangladesh Central Bank currency swap have helped boost investor sentiment during the week.
Brokers said speculation of the country, which is facing some tough economic challenges including external debt repayment, seeking an IMF debt restructuring could also boost the sentiment.
However, Sri Lanka Co- cabinet spokesman Ramesh Pathirana on Tuesday told reporters that the government has not taken any decision yet to seek the International Monetary Fund but will consider based on future conditions.
Analysts still 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 9.4 billion rupees, well above two times this year’s average daily turnover of 3.9 billion rupees.
The fall was led by LOLC Holdings, Browns Investment, and Commercial Leasing and Finance Plc.
LOLC Holdings, the second market heavyweight worth 298.9 billion rupees, closed 1.67 percent down at 617.50 rupees a share.
Browns Investment, a subsidiary of LOLC fell 2.59 percent to close at 11.30 rupees a share.
Commercial Leasing and Finance, which was traded in thin volume, down 2.62 percent to close at 22.30 rupees.
Expolanka Holdings which has the highest market capitalization worth 359.7 billion rupees of the total market capitalization gained 1.08 percent to close at 186.75 rupees.
Market participants said EXPO continued topping the turnover list contributing 19.0% of total turnover.
The bourse saw 105 stocks gaining against 101 falling on Friday. (Colombo/September 03/2021)