ECONOMYNEXT – Sri Lanka stocks fell on Monday (25) for the second session as investors took a wait-and-see approach as mixed negative and positive signals delayed their decisions on investments in risky assets, brokers said.
The main All Share Price Index (ASPI) closed 1.07% or 82.36 points down at 7,639.42.
“We see a downward trend in the market because the market is looking for the next signal as there is some political stability. But the ultimate goal of economic stability has not been achieved yet,” a broker said.
“The feedback the country got for lastweek’s incident is also creating some negativity,” he said referring to the military attack on protesters who have been agitating over 100 days near the country’s presidential secretariat.
There’s also margin selling in the market with a low supply of buyers, he .
President Wickremesinghe appointed former minister Dinesh Gunawardene as the Prime Minister of the crisis-hit island nation that has plunged into a political crisis and reappointed the same cabinet he had before the parliament vote. The only exception was the foreign minister.
The more liquid S&P SL20 index also fell, closing at 1.13% or 27.70 points lower at 2,434.28.
Sri Lanka is facing its worst fuel crisis in its post-independent era and the economy is expected to contract between 8-10% this year.
Foreigners bought a net of 2.8 million rupees. However, the total foreign outflow so far this year is 675 million rupees.
The turnover was 744 million rupees, less than a quarter of this year’s average daily turnover of 3.1 billion rupees.
The main ASPI has gained 4.0% in July so far after falling 9.3% in June, reversing a 6% gain in May. It lost 23% in April followed by a 14.5% fall in March.
The market has lost 37.5% so far this year after being one of the world’s best stock markets with an 80% return last year when large volumes of money were printed.
Sri Lanka’s sovereign debt default on April 12 has already led the country to be rated with restricted/selective default rating by rating agencies, which has weighed on investor sentiment.
Investors are also concerned over the steep fall of the rupee from 203 to 370 levels so far in 2022.
Sampath Bank, leading the ASPI’s fall, closed 3.9% to end at 32.20 rupees a share.
Browns Investments fell 6.4% to 7.3 rupees a share, while Harischandra Mills closed 24.3% down at 4,200 rupees a share. (Colombo/July 25/2022)