On Thursday, the Colombo Stock Exchange (CSE) recorded its highest turnover in eight months, reaching an impressive Rs. 4.8 billion. This surge in activity is a clear sign of improved investor confidence and strong market performance, driven mainly by trading in major blue-chip companies and select banks. The day’s trading involved a remarkable 124.7 million shares changing hands.
Key Performers in the Market
Some of Sri Lanka’s biggest companies contributed significantly to the turnover. John Keells Holdings (JKH), one of the country’s top conglomerates, led the way with Rs. 450 million worth of trades. This was followed closely by Sampath Bank with Rs. 406 million, and Commercial Bank with Rs. 257 million.
Overall, the S&P SL20 index, which tracks the top 20 companies in Sri Lanka, gained 1.55%, while the broader All Share Price Index (ASPI) climbed 0.94%, marking a strong day for the market.
Positive Sentiment Boosts the Market
The sharp increase in turnover was largely driven by improved sentiment among investors, particularly in the banking sector and blue-chip stocks. According to First Capital, the market experienced sustained bullish momentum, which followed several days of volatile trading.
The day ended on a high note, with the ASPI reaching a five-month high of 12,474 points, gaining 116 points in a single day. Major contributors to this increase included top companies like JKH, Sampath Bank (SAMP), Hatton National Bank (HNB), Ceylon Tobacco Company (CTC), and Hayleys (HAYL).
Retail and Institutional Investors Show Increased Participation
Both retail and high-net-worth (HNW) investors played a significant role in Thursday’s trading session. The turnover saw a more than 100% increase compared to the monthly average, showing the strength of investor confidence.
NDB Securities reported that the positive market movement was supported by price gains in companies such as JKH, Sampath Bank, and Hatton National Bank. These companies are seen as strong performers in the current market, attracting both institutional and individual investors.
Sector Performance: Capital Goods and Banking Lead the Way
The Capital Goods sector emerged as the top contributor to market turnover, accounting for 38% of the day’s total. This was largely due to the significant trading in shares of John Keells Holdings and Hayleys. In fact, the Capital Goods sector index gained 2.41% for the day.
Hayleys, a leading diversified conglomerate in Sri Lanka, saw its share price increase by Rs. 2.50, closing at Rs. 105.50. Meanwhile, John Keells Holdings’ share price rose by Rs. 6.50, ending the day at Rs. 209.50.
The Banking sector also performed well, contributing 36% to the overall turnover. The sector index grew by 1.42%, with notable gains from Sampath Bank and Hatton National Bank. Sampath Bank’s share price increased by Rs. 1.50 to close at Rs. 85.50, while Hatton National Bank gained Rs. 3.50, ending at Rs. 219.25.
Mixed Interest from Investors
Apart from the banking and capital goods sectors, there was mixed interest in companies like Hatton National Bank, Sunshine Holdings, and LVL Energy Fund. Retail investors showed interest in Hikkaduwa Beach Resort, Panasian Power, and Industrial Asphalts.
High-net-worth individuals and institutional investors were particularly active in stocks like Hayleys, Sampath Bank, and John Keells Holdings. These companies are considered stable and reliable investments, which likely attracted more conservative, long-term investors.
Foreign Investors Turn Net Sellers
While local investors showed enthusiasm, foreign investors turned net sellers on Thursday, with a net outflow of Rs. 39.8 million. This selling activity by foreign investors could be a result of global economic uncertainty or profit-taking strategies.
However, the domestic investor base, bolstered by both retail and institutional participants, was strong enough to offset the impact of foreign selling, maintaining the bullish momentum in the market.
Energy Sector Also Sees Gains
In addition to the strong performances from the banking and capital goods sectors, Resus Energy made it into the top turnover contributors. The renewable energy company saw its share price increase by Rs. 1.80, closing at Rs. 27.80. This indicates that there is growing interest in renewable energy stocks as investors look for long-term growth opportunities in sustainable industries.
What Does This Mean for the Future?
The surge in turnover and the strong performance of the Colombo Stock Exchange is a positive sign for Sri Lanka’s economic recovery. The stock market’s performance is often viewed as a reflection of the broader economy, and the improved sentiment among investors suggests growing confidence in the country’s financial and corporate sectors.
Moreover, the increase in turnover indicates that more investors are returning to the market, which could fuel further growth in the coming months. If this trend continues, it could also attract more foreign investors back to the market, especially if global economic conditions stabilize.
However, the market is not without risks. The outflow of foreign investment, although minimal on Thursday, could become a concern if it continues over a prolonged period. Additionally, global economic uncertainties, such as inflation and rising interest rates, could affect investor sentiment and market performance in the future.
Conclusion
The Colombo Stock Exchange’s turnover reaching an eight-month high of Rs. 4.8 billion is a significant milestone for Sri Lanka’s stock market. Major blue-chip companies like John Keells Holdings, Sampath Bank, and Hayleys led the charge, with strong performances across both the Capital Goods and Banking sectors.
The surge in investor confidence, especially among local retail and institutional investors, bodes well for the market’s future. However, foreign investor sentiment remains a factor to watch closely, as global economic conditions continue to evolve.
As Sri Lanka moves forward in its economic recovery, the stock market is likely to remain a critical component of this journey. Investors, both local and foreign, will be keeping a close eye on the performance of key sectors, such as banking, capital goods, and renewable energy, as they navigate the opportunities and risks in the market.
