Sri Lanka shares rise from 3-wk low; foreigners buy

ECONOMYNEXT – Sri Lanka stocks moved up marginally on Thursday (02) from a three-week low, rising for the first time in eight straight sessions, but analysts say the gains cannot be sustained as the market is under selling pressure.

Foreign investors bought a net 185.9 million rupees worth of shares on Thursday. The market has witnessed a total foreign outflow of 957 billion rupees so far this year.

The All Share Price Index (ASPI) closed 0.43 percent or 34.82 points down at 8,099.51, from its lowest close since May 12.

“The market has no reason today to move up as the selling pressure and margin calls are still very much persistent. However, after slipping for seven days it’s just a small breather,” a top market analyst said.

Another market analyst said it was just a flat side way movement but the negative sentiments are very much present.

Uncertainties stemming from a proposed constitutional change and ongoing economic crisis have hit on the investor sentiment.

Prime Minister Ranil Wickremesinghe, in his fiscal reforms, has already implemented a raft of tax hikes. Sri Lanka also hiked fuel prices. Though higher taxes are good for state finances and an IMF deal, they will hit earnings.

The more liquid S&P SL20 index gained 0.62 percent or 16.34 points to 2,671.72.

The market gained 6 percent in May after losing 23 percent in April and 14.5 percent in March.

The market has lost 33.7 percent so far this year after being one of the world’s best stock markets with an 80 percent return last year when large volumes of money were printed.

The daily market turnover was 1.4 billion rupees, around a third of this year’s average daily turnover of 3.9 billion rupees.

Sri Lanka’s sovereign default has already led it to restricted/selective default rating by rating agencies and weighed on investor sentiment.

Investors are also concerned over the steep fall of the rupee from 200 to 370 levels so far in 2022.

On Thursday, the All Share Price Index was pushed up mainly by John Keells Holdings, which gained 2.6 percent to 126.7 rupees a share.