ECONOMYNEXT – Sri Lanka stock index hit a fresh record high and rose for a fifth straight session on Tuesday (28), as ample broker credit and speculations over some select shares drove the index, brokers said.
The index closed 0.75 percent up after hitting the fresh record high of 9,446.42 before closing with 69.63 points up at 9,339.28 points.
The S&P SL20 index of more liquid stocks gained 0.82 percent or 27.94 points to close at 3,444.06.
Foreign investors, however, sold a net 296 million rupees worth of shares on Tuesday. The market has suffered a net foreign outflow of over 43.5 billion rupees so far this year.
The day’s turnover was high of 6.6 billion rupees, above this year’s average daily turnover of over 4 billion rupees.
“There were a lot of broker credit available to buy shares and many were going behind some speculative shares which were gaining with no fundamental reasons,” said a Colombo-based stock broker.
Reappointed central bank governor Nivard Cabraal’s statements including more focus on growth and stability, current policy rates are at a reasonable level, and currency have seen as positive to the market.
Sri Lanka’s debt office on Tuesday held its first bond auction without price controls after a long time and allowed some of the rates to rise after a week after allowing Treasury bill yields between 30-38 basis points signalling a possible increase in the market interest rates.
The move could help the central bank to print less money while brokers say the rise in the interest rates could see investors shifting their funds from equity to fixed assets slowly.
The country’s risky assets have unusually gained since mid-2020 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.
Importers have complained that they are compelled to pay nearly 15 percent more than the central bank’s official rate as state banks do not have adequate dollars.
The gain was led by Expolanka Holdings, LOLC Holdings and Commercial Leasing and Finance.
Expolanka Holdings, the market heavyweight which has a significant export component in its business, gained 3.04 percent to close at a record 195.50 rupees a share.
Commercial Leasing and Finance gained 4.47 percent to close at 30.40 rupees.
LOLC Holdings rose 3.87 percent to close at 587.00 rupees a share.
The bourse saw 101 stocks gaining against 94 falling on Tuesday.
Brokers say the market could fall significantly if a market correction starts. (Colombo/September27/2021)