ECONOMYNEXT – Sri Lanka stocks reversed its falling trend and gained for the first time in six sessions on Tuesday closed stronger on Tuesday (21) though turnover hit a 16-month low amid political and economic concerns, brokers said.
The main All Share Price Index (ASPI) closed 1% or 77.7 points higher at 7,502.28, gaining from its near eight-week low.
“The market was desperately looking for some positive news and the IMF meeting with the Prime Minister was seen as a positive move,” a market analyst said.
“If you see the turnover levels, they are low in the last few days, This shows the selling pressure is bottoming out and the market is waiting for some positive news to react.
Tuesday’s turnover recorded a 16-month low of 760 million rupees, its lowest since March 22, 2021. This is less than a quarter of this year’s daily average of 3.5 billion rupees.
Analysts said the market moved on positive sentiments as investors were hopeful on an IMF deal as the discussions began in Colombo on June 20.
A 10-member IMF team arrived in Sri Lanka and began discussions on policy corrections with Prime Minister Ranil Wickremesinghe on Monday
However, Sri Lanka must show progress on debt restructuring before IMF lends any money.
Market analysts have said investors were heavily feeling the pinch of economic crisis as the country’s fuel bunkers have dried out the island nation was frantically looking for dollars to purchase fuel.
The public sector and the schools have moved online for two weeks on the government’s advice to reduce transport and save fuel.
Though a new prime minister and a new cabinet have been appointed, analysts see little progress on both the economical and political fronts. The country is struggling to ensure a continuous supply of fuel due to a shortage of US dollars.
The more liquid S&P SL20 index gained 1.51% or 35.65 points to 2,400.57
Foreign investors sold a net of 9.5 million rupees worth of shares on Tuesday. The market has witnessed a total foreign outflow of more than 1 billion rupees so far this year.
The market has so far lost 7.3% in June after gaining 6% in May. It lost 23% in April followed by 14.5% fall in March.
The market has lost 38.6% so far this year after being one of the world’s best stock markets with an 80% return last year when large volumes of money were printed.
Sri Lanka’s sovereign debt default has already led the country to be rated with restricted/selective default rating by rating agencies, which has weighed on investor sentiment.
Investors are also concerned over the steep fall of the rupee from 203 to 370 levels so far in 2022.
All Share Price Index was mainly pushed up by Expolanka, which lost 4.2% to 168.25 rupees a share.
Dialog Axiata was up 5.2% to 10.10 rupees a share, while DFCC Bank gained 6.5% to 37.90 rupees a share. (Colombo/June21/2022)
The market was desperately looking for some positive news and the IMF meeting with the Prime Minister was seen as a positive move