Colombo stock market cautious amidst political crisis

The Colombo stock market yesterday saw losses, though marginal, amidst moderate turnover, with analysts being wary whether the outcome was linked to political crisis following the remand of former President Ranil Wickremesinghe on Friday for allegations of abuse of State funds.

The benchmark ASPI was down by over 73 points or 0.36%, whilst the active S&P SL20 declined by 0.78%. Turnover was Rs. 4.4 billion, a new low in over a week, involving 134 million shares.

Until last week, year-to-date, the ASPI has gained by 29.5% and the S&P SL20 by 25%.

Some analysts said there was a sense of profit-taking, given the high levels the indices have risen in recent months. Last week, the market was up 2%. Others opined that investors were concerned over the contentious political scene, with the Opposition ganging up against the circumstances under which former President Wickremesinghe was arrested and remanded and alleged reasons for the same.

Given the developments over the weekend, some brokers expected a big dip yesterday, whilst other analysts were hoping for a gain as upholding the rule of law is a good sign for investor confidence.

The market’s performance today and tomorrow will confirm the actual investor sentiment.

First Capital in its market report said echoing the selling sentiment from the previous week, the Colombo Stock Exchange experienced continued profit-taking, with selling pressure concentrated in Banking and blue-chip counters weighing down the index.

The ASPI opened the day under selling pressure, followed by a phase of bargain hunting. Despite this, the index failed to recover and ended the day in negative territory. Key negative contributors to the index included HNB, JKH, COMB, HAYL, and CARG. 

Investor participation remained relatively subdued, with limited activity from both retail and HNW investors. As a result, market turnover dropped to over a one-week low and reflected a 31% decline compared to the monthly average. The Banking sector led turnover contributions, accounting for 31% of the total, while the Capital Goods and Diversified Financials sectors together made up 35% of the overall turnover. Foreign investors remained net sellers, with a net outflow of Rs. 801.2 million.

NDB Securities said indices closed in red as a result of price losses in counters such as Hatton National Bank, John Keells Holdings, and Commercial Bank.

Crossings were witnessed in Hatton National Bank, E. B. Creasy & Company, and Hemas Holdings, accounting for 55.7% of the turnover.

Mixed interest was observed in Royal Ceramics, Sierra Cables, and Colombo Dockyard, whilst retail interest was noted in Mackwoods Energy, HVA Foods, and Renuka Agri Foods.

The Banking sector was the top contributor to the market turnover (due to Hatton National Bank and Sampath Bank), whilst the sector index lost 0.93%.

The share price of Hatton National Bank decreased by Rs. 6.25 (1.55%) to Rs. 397.75. The share price of Sampath Bank closed flat at Rs. 145.75.

The Capital Goods sector was the second highest contributor to the market turnover (due to Hemas Holdings and Royal Ceramics), whilst the sector index decreased by 1.06%. The share price of Hemas Holdings lost Rs. 0.10 to Rs. 30.80. The share price of Royal Ceramics closed flat at Rs. 45.

Sunshine Holdings was also included amongst the top turnover contributors, with its share price losing Rs. 0.20 to Rs. 30.50.