Moody’s downgrade drags market down

• Panic-selling triggers sharp fall in early trading, but active bargain hunters help minimise dip at closing
• Year-to-date net foreign selling nears Rs. 40 billion

The rating downgrade by Moody’s triggered a dip in the Colombo stock market yesterday, though spirited buying interest stemmed a sharper fall.

Ending multiple days of gain, the Colombo Stock Exchange (CSE) ended the day with All Share Price Index down over 34 points, and the S&P SL 20 Index down by over 19 points. 

Turnover improved to Rs. 3.1 billion, higher than last week’s daily average.

“During the first hour of trading, both indices saw a sharp decline following the news about the country’s rating downgrade. However, the ASPI made an about-turn in the next hour to recover most of its losses to end the day moderately lower. This recovery was mainly anchored by the mid cap stocks,” Asia Securities said. 

First Capital said the Bourse lost momentum on the back of the rating downgrade by Moody’s, reverting the direction of the market to negative after three consecutive sessions in the green zone. 

“The index plunged within the first 30 minutes of trading due to the selling pressure in selective Food and Beverage counters as it hit its intraday low of 5,937. Subsequently the market bounced back and reached its intraday high of 6,032 during mid-day while later closing at 5,994 following a slight downward movement with a dip of 35 points,” First Capital added.

Asia Securities said crossings accounted for 21.6% with 1 crossing recorded in COMB (Rs. 22 million), 4 crossings recorded in HNB (Rs. 634.1 million) and 1 crossing recorded in MGT (Rs. 24 million). 

Banks sector was the highest contributor towards the turnover at Rs. 1,563.89 million followed by Food, Beverage & Tobacco sector and Materials sector generating Rs. 321.62 million and Rs. 264.61 million respectively. 

Foreigners closed as sellers worth Rs. 1,184.04 million while their participation in terms of turnover increased to 20.6% (previous day 4.1%). Estimated net foreign buying topped in JKH (Rs. 17.1 million). Estimated net foreign selling topped in HNB (Rs. 1,200.4 million).

Frist Capital too said banking counters dominated the turnover for the day led by HNB contributing 38%. Moreover the parcel trades in HNB, MGT and COMB boosted the turnover amounting to 22% total. The market witnessed the highest net foreign outflow after four and half months while recording moderate participation. Net foreign selling amounted to Rs. 39.7 billion year to date, according to First Capital.

NDB Securities said the ASPI closed in red as a result of price losses in counters such as Carson Cumberbatch, Bukit Darah, and John Keells Holdings.

It said high net worth and institutional investor participation was noted in Hatton National Bank and Expolanka Holdings. Mixed interest was observed in Commercial Bank and Hayleys Fabric, whilst retail interest was noted in Ceylon Grain Elevators and Tokyo Cement Company. 

The Banking sector was the top contributor to the market turnover (due to Hatton National Bank, Commercial Bank and Sampath Bank), whilst the sector index lost 1.03%. The share price of Hatton National Bank decreased by Rs. 1.90 (1.47%) closing at Rs. 127.10, whilst foreign holdings decreased by 9,444,605 shares. The share price of Commercial Bank recorded a loss of Rs. 0.90 (1.11%) to close at Rs. 80.00. The share price of Sampath Bank declined by Rs. 0.60 (0.44%) to close at Rs. 134.40.

Food, Beverage and Tobacco sector was the second highest contributor to the market turnover, whilst the sector index decreased by 1.24%.

Hayleys Fabric and Expolanka Holdings were also included amongst the top turnover contributors. The share price of Hayleys Fabric gained Rs. 1.60 (6.87%) to close at Rs. 24.90, whilst the share price of Expolanka Holdings moved down by Rs. 0.10 (0.91%) to close at Rs. 10.90.

Dipped Products and Hayleys Fabric announced their interim dividends of Rs. 3.00 and Rs. 0.25 per share

respectively.