The market exhibited a promising start during the morning session, but as the day progressed, it gradually transitioned into a downward trajectory, primarily attributed to Fitch Ratings' recent downgrade of Sri Lanka's Long-Term Local-Currency Issuer Default Rating from 'C' to 'RD' (Restricted Default).
In response to this rating adjustment, the banking sector encountered modest selling pressure over the course of the day. Despite this, trading volumes remained relatively thin driven by concerns surrounding the upcoming IMF review and the impending budget.
Notably, MGT topped the turnover, with active investor participation driven by high expectations for promising results in the upcoming quarter. Furthermore, there was increased activity in construction-related stocks, such as AEL, LALU, and PLR, possibly buoyed by improved sentiment stemming from project developments such as the Japan-funded LRT project.
However, the market turnover plummeted to over a 3-month low of LKR 784.1Mn, marking a 69% decline from the monthly average of LKR 2.5Bn whilst the Capital Goods sector contributed 23% to the overall turnover.
Yield curve budge down as buying interest persists
Resulted by the latest bond issuance window results on the 14th Sep-23 the secondary market witnessed buying interest mainly centering on the bonds which were auctioned on the 12th Sep-23, resulting the yield curve to budge lower.
Moreover, 01.08.26 maturity traded at 14.10% whilst 01.07.28 tenor traded at 13.55% during the day. Meanwhile in the forex market LKR remained stagnant against the greenback settling at LKR 323.4.
Courtesy: First Capital Research
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