Middle East tensions hit CSE, ends down 5.4% in biggest single-day drop

Wednesday, 4 March 2026 00:24 - - {{hitsCtrl.values.hits}}

ASPI movement on 3 Feb.

S&P SL20 movement on 3 Feb.

Escalating conflict in the Middle East sent shockwaves through the Colombo ‘stock’ market yesterday, with panic selling at the open dragging indices sharply lower and triggering a 30-minute circuit breaker halt within minutes of trading.

The market regained composure thereafter, but the damage was done.

The ASPI ended the session in a two-month low and the biggest single-day drop in history, down 1,290.68 points, or 5.4% at 22,443.38, while the active S&P SL20 ended 322.32 points down, or 4.9% at 6,313.65. The largest single-day decline in index points prior to this occurred on 1 December 2025, when the ASPI shed 690.76 points. On a percentage basis, the steepest contraction was recorded on 2 February 2021, when the ASPI dropped 6.56%.

Foreign investors were net sellers on a net outflow of Rs. 59.6 million.

Almas Equities Research said the market commenced trading with a significant sell-off, triggering a sharp decline in the S&P SL20 index, which fell by over 5% and activated the circuit breaker. Within the first two minutes of the session, turnover reached Rs. 418 million, while the ASPI declined by approximately 1,250 points.

Following the temporary suspension and subsequent reopening of trading, the market showed a notable recovery. The ASPI regained around 450 points, narrowing the decline to -3.47%, while the S&P SL20 improved to -2.93%, indicating a degree of stabilisation supported by strong turnover levels.

The initial panic-driven selling pressure was gradually absorbed by value investors, contributing to the partial recovery observed during the session.

First Capital Research said in response to heightened geopolitical tensions following the outbreak of the Iran–Israel conflict over the long weekend, the Colombo bourse opened sharply lower yesterday.

When trading resumed, investor sentiment remained cautious; however, attractive valuations at lower price levels sparked bargain hunting, driving a pickup in activity. This resulted in a robust turnover of Rs. 9.6 billion, representing an increase of 62.9% over the monthly average turnover of Rs. 5.9 billion.

Market breadth remained broadly negative, with 269 counters closing in the red and exerting downward pressure on the ASPI, led by COMB, SAMP, HNB, JKH, and HAYL. In contrast, only 5 counters recorded positive contributions, namely LIOC, CFLB, BOPL, MRH, and MADU.

HNW participation remained subdued, while retail investor activity was notably strong, driven by significant buying interest. The capital goods sector led the daily turnover with a share of 28%, followed by the banking, and food beverage and tobacco sectors collectively contributing 32%.

CT Smith Securities said COMB.N emerged as the top contributor to turnover with Rs. 669 million involving 3.2 million shares, followed by AEL with Rs. 618 million involving 8.2 million shares, and ACL with Rs. 525 million on 5.3 million shares traded.