Equities post modest gains for a third session while trading activity thins; treasury yields climb at the mid-to-long end and foreign investors add to local bond holdings even as they trim equity exposure.
Key Highlights
The Colombo Stock Exchange closed higher for a third consecutive session, though trading activity thinned considerably. Fixed income markets saw yields firm at the mid-to-long end of the curve, while the rupee held broadly steady against the US dollar.
Stock Market Summary
The All Share Price Index (ASPI) added 49.81 points, or 0.24%, to close at 21,199.37, while the S&P SL20 gained 13.25 points, or 0.22%, to finish at 5,945.87. Market capitalisation edged up 0.1% to LKR 7,684.76Bn.
Daily turnover totalled LKR 1.08Bn, a decline of 37.7% against the monthly average of LKR 1.7Bn and down sharply from the previous session. Trading volume also eased to 37.74Mn shares. The Capital Goods sector led turnover with a 29% share, while the Banking and Food, Beverage & Tobacco sectors together contributed a further 36%.
Foreign investors were net sellers for the session, with outflows of LKR 188.6Mn against inflows of LKR 124.83Mn. Month-to-date foreign flows stand at a net outflow of LKR 3,190.2Mn, while the year-to-date figure shows net outflows of LKR 37,298.2Mn, underscoring a sustained trend of foreign selling in local equities this year rather than a one-day move. The market’s valuation stood at a PER of 11.2x and PBV of 1.3x.
Fixed Income Summary
Government securities yields moved higher across the 5-to-7-year segment of the curve, each rising by 30 basis points week-on-week, with smaller increases also recorded further out the curve. Trading was observed across several maturities, with the 15.09.2029, 15.10.2029 and 15.12.2029 bonds all changing hands at 11.25%. The 01.07.2030 maturity drew notable buying interest from foreign investors, while the 01.07.2037 bond traded at 12.70%.
At the short end, Thursday’s T-bill auction saw the 91-day yield ease 18 basis points to 9.95%, with 184-day and 364-day yields largely steady. Overnight liquidity in the banking system contracted to LKR 156.54Bn from LKR 175.20Bn previously. Foreign holdings of rupee government securities rose 4.54% week-on-week to LKR 176,561Mn.
Currency Market Update
The rupee depreciated marginally against the US dollar, closing at LKR 336.42, compared with LKR 336.35 in the prior session.
Business Impact
Thinning equity turnover alongside continued foreign selling points to cautious near-term positioning among investors, even as headline indices post gains. For businesses and treasurers, the rise in mid-to-long-tenor government securities yields is a signal to watch, as it may feed through to borrowing cost expectations. Meanwhile, rising foreign participation in government debt — a contrast to the equity outflow trend — suggests external investors continue to find value in local fixed income at current yield levels.
What to Watch Next
Market participants will be watching whether foreign buying interest in government securities broadens beyond the 01.07.2030 maturity, and whether equity turnover recovers toward the monthly average in coming sessions.
Key Numbers
| Metric | Value | Change |
|---|---|---|
| ASPI | 21,199.37 | +49.81 (+0.24%) |
| S&P SL20 | 5,945.87 | +13.25 (+0.22%) |
| Turnover | LKR 1,078.02Mn | -69.5% DoD / -37.7% vs monthly avg |
| Market Cap | LKR 7,684.76Bn | +0.1% |
| Net Foreign Flow (Equity) | -LKR 188.62Mn | MTD: -3,190.2Mn / YTD: -37,298.2Mn |
| USD/LKR | 336.42 | +0.07 |
| Overnight Liquidity | LKR 156.54Bn | down from LKR 175.20Bn |
| Foreign Holding of GSecs | LKR 176,561Mn | +4.54% WoW |
Source Attribution
Source: Colombo Stock Exchange market data, Central Bank of Sri Lanka statistics and publicly available market information.