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Panic selling drags down market – SC Securities

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The ASPI declined by 3.89% this week. The S&P declined by 5.33% this week. The net foreign outflows for the week stood at LKR 207 Mn.

Sri Lanka stock market slightly gained on Monday under the newly implemented index calculation while the turnover boosted to LKR 18.4 Bn with JKH’s foreign deal. Market weighed over the country’s prevailing fuel shortage and possible currency depreciation to hit corporate earnings.

All share price index fell to a two-week low on Tuesday over prevailing uncertainties in the economy. ASPI dived into the red zone with a 173.94 points loss as investors kept on taking profits from several selected counters. EXPO, LOLC and CLC were the dominant players to drag down the index.

Sri Lanka stock market fell for the second consecutive session on Wednesday with ASPI losing 144.42 points and S&P SL20 losing 47.94 points. LOLC, SAMP and CINS pushed down the index to the lowest since January 4th. Foreign investors sold a net of LKR 67.4 Mn for the day.

The same bearish pattern on Thursday dragged ASPI further down by 180.05 to close at 12,885.70, well below the 13,000 benchmark level. Despite the impressive quarterly results from listed entities, it had observed that a lot of panic selling was taking place due to worries from both local and international fronts.

The market went down for the fourth straight session on Friday, losing 22.56 points to close at 12,863.14. EXPO reported the highest turnover for the day with its outstanding quarter results released early morning. The market is highly volatile with all the uncertainties and crises ongoing, so the existing bearish momentum would be expected when markets open.


Headline inflation, measured as a YoY change in National Consumer Price Index, increased to 14.0% in December from 11.1% in November 2021. The said upsurge was mainly attributed to price increases in both food and non-food categories, which were reported as 21.5% and 7.6% respectively. Within the food category, prominent increases were there within vegetables and rice whereas the Non-food category increased with price pick-ups in hotel services and Alcoholic beverages.

Sri Lanka reports its highest monthly export value of US$ 1.21 Bn in November 2021, marking the sixth consecutive month to exceed US$ 1 Bn. Meanwhile, imports also rose to US$ 1.76 Bn during November which is a 27.5% YoY growth. Reflecting the favourable export trends, the trade deficit has narrowed to US$ 553 Mn in November 2021 which was US$ 600 Mn in the comparative period of 2020. Tourist arrivals picked up a greater momentum during the month to result in a net inflow of US$ 60 Mn whereas Workers’ remittances declined by 55.6% YoY to US$ 271 Mn, Worker’s remittances seem further declined compared to US$ 317 in October 2021, despite the encouraging initiatives undertaken by Central Bank. Industrial exports including garments, and rubber topped in generating export earnings while fuel and textiles and textile articles contributed to the said increase in imports.

It has been warned by several industry bodies that there can be a possible adverse hit to the country’s export earnings amid the prevailing forex shortage and not being able to obtain the required raw materials to continue the production lines. If it seems suppliers are losing their confidence in Sri Lankan exporters’ delayed payments and not being able to meet the deadlines, the buyers will get retrieve their orders from Sri Lankan companies.


Central Bank’s Treasury bill auction for this week was held last Wednesday (26th), selling out LKR 80.5 Bn worth of treasuries with the majority comprising three month T-bills. 3-month treasury yield further went up by 14 basis points to 8.63% from 8.49%, whilst the 6-month yield also increased from 8.44% to 8.55%, by 11 basis points. 12-month Treasuries also gained 7 basis points to reach 8.55% over 8.48% last week.


Oil heads for its sixth weekly gain, amid tight supply conditions as producers continue their policy of limited output despite the surge in oil demand. Fears of disruption of energy supply from Russia have rattled the oil prices.

Gold prices were flat on Friday and set for their sharpest weekly decline since November as investors expecting five rate hikes with Fed’s hawkish monetary policy could lead to a surge in dollar and treasury yields.

Copper prices on London Metal Exchange rose on declined upon the same speculation over Federal Reserve’s Hawkish Policy implementation sooner than expected, boosting the dollar.

Aluminium advanced on Friday despite the weekly fall. it said that possible risks to commodities from potential sanctions on Russia could drive a spike in metal prices that Russia produces, having Aluminium as one on the top.

International Markets

Europe’s main bourses fell as worries about a sudden stop to Central bank stimulus and rising fears between Western Powers and Moscow continued to hamper world stocks to one of their worst ever starts to a new year. The Pan- European STOXX 600 fell nearly 1%.

U.S. stocks fell after a solid opening on Thursday, while the dollar gained to report its best week in seven months as it seems investors are prepared enough for future rate hikes from Fed. All three major U.S. stock indices ended lower where Dow Jones declined by 0.02%, S&P 500 by 0.54% and Nasdaq Composite by 1.4%.

Asian shares rebounded to gains after losses in previous sessions as strong U.S. economic growth and Apple Inc’s impressive earnings somehow offset the bearishness from Federal Reserve’s hawkish signals. Japan’s Nikkei gained 2.09% to close at 26,717.34.

Nevertheless, several other Asian markets end up incurring losses. Hang Seng index fell on Friday resulting in its worst week since August due to rising expectations of monetary tightening by U.S. Federal Reserve.


Wednesday, April 20, 2022 – 01:00

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