The ASPI declined 147 points on June 30 as geopolitical uncertainty drove a broad equity selloff, while fresh data showed headline inflation accelerating to 6.8% and banking system liquidity expanded sharply.
Key Highlights
- ASPI declined 147 points to close at 22,263
- S&P SL20 fell 42 points to end at 6,205
- Market turnover stood at LKR 1.8 billion, 32.4% below the monthly average
- Foreign investors recorded a net outflow of LKR 466.1 million, the largest in the past week
- Headline inflation rose to 6.8% in June from 5.5% in May
- Food inflation nearly quadrupled to 3.6% from 0.9%
- Secondary bond yields remained broadly stable across the curve
- Banking system liquidity expanded to LKR 82.56 billion from LKR 61.62 billion
- USD/LKR appreciated marginally to 336.66 from 337.04
Stock Market Summary
The Colombo Stock Exchange closed sharply lower on June 30, 2026, as renewed geopolitical uncertainty triggered broad-based selling across the market. The All Share Price Index declined 147 points to close at 22,263, while the S&P SL20 fell 42 points to end the session at 6,205. The move reverses much of the gains recorded just five sessions earlier, when the ASPI had advanced 198 points on June 25.
The main negative contributors to the ASPI were DIAL, JKH, WIND, CIC and HAYL, with weakness spread across telecommunications, diversified holdings, utilities and consumer-facing sectors. Both high-net-worth and retail participation held at average levels during the session, suggesting the decline reflected sentiment-driven repositioning rather than a wholesale exit from the market.
Daily turnover stood at LKR 1.8 billion, a decrease of 32.4% from the monthly average of LKR 2.6 billion. The Utilities sector led daily turnover with a 28% share, while the Capital Goods and Retailing sectors collectively contributed a further 28%.
Foreign investors turned net sellers during the session, posting a net outflow of LKR 466.1 million, the largest single-day foreign outflow recorded in the past week and just below the threshold typically associated with high-priority market events. The scale of the foreign exit indicates that international investors reacted more decisively to the day’s geopolitical developments than domestic participants.
Fixed Income Summary
The secondary bond market began the week on a quiet note, with the yield curve remaining broadly stable. Trading activity and volumes were subdued, concentrated mainly among primary dealers and banking sector participants. Among the maturities traded, the 01.08.2030 and 15.10.2030 bonds changed hands within a range of 11.30% to 11.45%, with the 01.08.2030 tenor rising 7 basis points and the 15.10.2030 tenor easing 3 basis points.
Foreign investor interest was notably concentrated in longer-dated maturities. The 15.03.2035 bond traded between 11.80% and 11.90%, while the 15.08.2036 bond traded between 11.90% and 11.95%. The continued foreign appetite for long-tenor government securities stands in contrast to the foreign selling pressure observed in the equity market on the same day, suggesting that international investor concerns were specific to equity risk rather than a broader retreat from Sri Lankan assets.
Banking system liquidity expanded significantly to LKR 82.56 billion from LKR 61.62 billion in the prior session, an increase of nearly LKR 21 billion. The sharp rise in system liquidity provides an accommodative backdrop for the fixed income market even as equity sentiment soured during the session.
Economic Indicators
The Department of Census and Statistics reported that headline inflation, as measured by the Colombo Consumer Price Index, rose to 6.8% year-on-year in June 2026, up from 5.5% in May. The 130 basis point increase was driven primarily by a sharp acceleration in food prices, with food inflation climbing to 3.6% from just 0.9% the previous month. Non-food inflation also rose, increasing to 8.4% from 7.8% in May.
The inflation release adds a layer of macroeconomic caution to a session already defined by equity market weakness, with both developments likely to factor into how investors and businesses assess the near-term outlook for the economy.
Currency Market Update
The Sri Lankan rupee appreciated marginally against the US dollar during the session, with the USD/LKR rate moving to 336.66 from 337.04 recorded previously. The move represents a modest reversal following the sharp depreciation recorded in the prior week, when the rupee had weakened by 1.80 in a single session on June 25.
Business Impact
Today’s combination of equity weakness, accelerating inflation and expanding liquidity presents a mixed picture for businesses to navigate. The geopolitically-driven equity selloff appears sentiment-led rather than fundamentals-driven, given that turnover stayed below average and the bond market showed no signs of stress. However, the inflation data carries more direct and lasting implications. A jump in food inflation from 0.9% to 3.6% in a single month will pressure household budgets and increase input costs for businesses across food retail and consumer goods supply chains. The broader rise in non-food inflation to 8.4% signals continued price pressure economy-wide, relevant for procurement planning, wage discussions and pricing strategy. The sharp expansion in banking system liquidity alongside rising inflation is a combination that will likely factor into upcoming monetary policy considerations. Businesses with near-term borrowing or investment plans should monitor how the Central Bank balances these competing pressures in the weeks ahead.
What to Watch Next
- Whether the geopolitical uncertainty driving today’s selloff escalates or eases in coming sessions
- Foreign investor flow direction following today’s LKR 466.1 million outflow
- Central Bank policy response to the sharp rise in headline and food inflation
- Whether food inflation continues to accelerate or proves to be a temporary spike
- Sustainability of the marginal rupee appreciation following last week’s sharp depreciation
- How banking system liquidity at LKR 82.56 billion interacts with rising inflationary pressure
Key Numbers:
| Metric | Value |
|---|---|
| ASPI | 22,263 (-147 points) |
| S&P SL20 | 6,205 (-42 points) |
| Market Turnover | LKR 1.8 Billion |
| Net Foreign Outflow | -LKR 466.1 Million |
| Headline Inflation (June) | 6.8% |
| Headline Inflation (May) | 5.5% |
| Food Inflation (June) | 3.6% |
| Food Inflation (May) | 0.9% |
| Non-Food Inflation (June) | 8.4% |
| Banking System Liquidity | LKR 82.56 Billion |
| USD/LKR | 336.66 |
Source Attribution:
Source: Colombo Stock Exchange market data, Department of Census and Statistics, Central Bank of Sri Lanka statistics and publicly available market and economic information.