Sri Lanka bourse down from over 5-month high; sees foreign outflow
ECONOMYNEXT – Sri Lanka stocks slipped on Tuesday (06) for the first time in six sessions from more than five month high on profit taking amid investors awaited for some clues for positive sentiments, brokers said.
The market saw a net foreign outflow of 103.9 million rupees on Tuesday, reversing a 15 straight day foreign buying. The bourse has seen a net foreign inflow of 1.74 billion rupees so far this year after 3.24 billion rupees of net inflow in the 15 consecutive sessions through Monday amid positive sentiment over an IMF deal.
The main All Share Price Index (ASPI) slipped 0.38% or 36.06 points to 9,330.33.
“The market has been highly volatile as the investors are looking for more news to keep the market up,” a market analyst said.
“We have two more months for the next budget while the earnings reports will be out in October in which we could see the impact on the corporate earnings. So until then we will see this volatility.”
Sri Lanka has raised the value added tax (VAT) to 15% from Sept. 1 to raise the government revenue.
The market saw a turnover of 4.1 billion rupees, higher than this year’s average daily turnover of 3.14 billion rupees.
Another analyst said the market witnessed investors shifting from index-heavy shares to newly active counters such as Lanka IOC that were active in the past couple of weeks.
“Market is running on a herd mentality; basically investors are selling the shares which are not running and buying shares those are active.”
The IMF announced that it reached a staff-level agreement with Sri Lanka on Thursday (01), with possible a 48-month 2.9 billion dollars in Extended Fund Facility (EFF) once the debt restructuring is done.
Sri Lanka also submitted a reform-oriented interim budget for 2022 on August 30th which was seen as market positive.
The budget is aimed at almost doubling the tax-to-GDP ratio to 15 percent by 2025 from 8.2 percent at
the end of 2021.
Sri Lanka is in the process of coming out of sovereign debt default declared on April 12 which deepened its economic crisis and turned into a political crisis. Sri Lanka is facing its worst fuel and economic crisis in its post-independence era. The economy is expected to contract more than 8 percent this year.
The more liquid S&P SL20 index ended 1.07% or 32.37 points down at 2,998.19.
The main index ASPI has gained 17.3 percent in August after gaining 5.3 percent in July. It lost 9.3
percent in June, 23 percent in April, and 14.5 percent in March.
The index has lost 23.6 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.
Investors are also concerned over the steep fall of the rupee from 203 to 370 levels so far in 2022.
LOLC dragged the index down, closing 4.2 percent lower at 582.7 rupees a share.
Commercial Bank closed 3.2 percent down at 51.8 rupees a share and LOLC Finance ended down 9.4 percent at 9.6 rupees. (Colombo/Sept06/2022)
