Driven by the global market recovery, the Colombo Bourse rebounded from the "Black Monday" wild turn and reversed the largest intraday loss since 8th Apr-22 with ASPI surging by 467 index points.

As a result, bargain hunting took place in the market, with investor sentiment shifting towards a buying outlook, leading the ASPI to close the day in the green at 15,1128.

Banking sector stocks such as COMB, SAMP, and HNB, along with JKH and HAYL, which exerted significant upward pressure on the index. Although turnover closed lower at LKR 2.9Bn, this still represented a 24.5% increase from the monthly average standing at LKR 2.3Bn.

The Banking sector accounted for 33.0% of the total turnover, while the Capital Goods and Food, Beverage, and Tobacco sectors collectively contributed 35.0% of the overall turnover. Foreign investors remained net buyers, recording a net foreign inflow of LKR 48.3Mn

Selling sentiment lingers, but yields hold firm

Today, the prevailing selling sentiment in the secondary market continued, with some foreign selling also observed. However, the market appeared to absorb these pressures, reflecting a more measured approach to selling rather than any aggressive offloading.

Market volumes remained subdued, with the upcoming T-Bond auction on the horizon adding a layer of caution among participants. On the very short end of the yield curve, the 01.02.2026 maturity traded at 8.70%. Moving ahead, the 15.09.2027, 15.10.2027 and 15.12.2027 traded at a rate of 10.00%. In terms of 2028 maturities, the 15.02.2028, 15.03.2028 and 01.05.2028 traded between 10.20% and 10.35% while the 01.07.2028 and 15.10.2028 bonds traded between 10.40% and 10.53%.

Moreover, the 15.09.2029 and 15.12.2029 maturities transacted between 10.80% and 10.85%. Finally, the 15.03.3031 maturity traded at a rate of 11.10%. In the forex market, the LKR depreciated against the greenback, ending the day at LKR 297.5/USD in comparison to LKR 296.8/USD registered on the previous day.

Meanwhile, overnight liquidity in the banking system contracted to LKR 190.9Bn from LKR 202.9Bn seen previously, while CBSL holdings of government securities remained stagnant.

Courtesy: First Capital Research