Equities little changed on subdued turnover; secondary bond market yields rise across the curve as banking system liquidity improves
Key Highlights
- ASPI closed at 21,623.66, up a marginal 3.22 points (0.01%)
- S&P SL20 closed at 6,066.55, up 7.63 points (0.13%)
- Daily turnover of LKR 2.13Bn came in 38% below the monthly average of LKR 3.4Bn
- Foreign investors were net sellers of equities by LKR 18.5Mn on the day, extending a year-to-date net outflow of LKR 56.4Bn
- Secondary market government bond yields rose across the mid-to-long tenors, with several maturities up 20-30 basis points week-on-week
- The LKR held broadly steady against the US dollar, closing at 328.34 against 328.36 previously
- Banking system excess liquidity expanded to LKR 362.14Bn from LKR 355.30Bn
Stock Market Summary
The Colombo Bourse closed largely unchanged after a session marked by early gains giving way to profit-taking. Both benchmark indices ended in positive territory but by narrow margins. Trading activity stayed well below typical monthly levels, with turnover of LKR 2.13Bn and volume of 63.98Mn shares. The Banking sector accounted for 22% of turnover, while Banking, Insurance, and Food, Beverage & Tobacco counters together made up more than half of daily activity. Foreign participation remained on the selling side, continuing a trend that has produced a net outflow of LKR 636.9Mn for the month to date.
Fixed Income Summary
The secondary bond market saw selling interest dominate trading. Yields on tenors from the 2030 maturities through the belly of the curve moved higher, with trades in the 15.08.2036 maturity dealt at 11.91%. Weekly comparisons show yields on the 4-year, 5-year, 7-year and 8-year tenors rising 20 to 30 basis points, while shorter-dated Treasury bills at the front end continued to ease, with recent auction rates on 91-day, 182-day and 364-day bills declining 8 to 17 basis points.
Currency Market Update
The rupee held largely steady against the US dollar, appreciating marginally to close at LKR 328.34, compared to LKR 328.36 previously.
Business Impact
Businesses with floating-rate borrowings or upcoming medium-term financing needs may face a modestly higher cost of funds as bond yields on the 4-to-8-year segment adjust upward, even as short-term bill rates continue to ease. The improvement in banking system liquidity may support credit availability in the near term. Currency stability offers exporters and importers continued predictability in pricing and planning.
What to Watch Next
Market participants will be watching whether the yield increase on medium-to-long tenors persists in upcoming trading sessions, and whether foreign equity outflows continue their year-to-date trend or show signs of moderation.
Key Numbers
| Metric | Value | Change |
|---|---|---|
| ASPI | 21,623.66 | +3.22 (+0.01%) |
| S&P SL20 | 6,066.55 | +7.63 (+0.13%) |
| Market Turnover | LKR 2.13Bn | -38% vs monthly avg |
| Market Volume | 63.98Mn shares | — |
| Net Foreign Flow (Equity, Daily) | -LKR 18.5Mn | — |
| Net Foreign Flow (Equity, MTD) | -LKR 636.9Mn | — |
| Net Foreign Flow (Equity, YTD) | -LKR 56.4Bn | — |
| USD/LKR | 328.34 | Marginal appreciation |
| Banking System Excess Liquidity | LKR 362.14Bn | Up from LKR 355.30Bn |
| 10-Year Bond Yield (indicative) | ~12.00% (bid) | +15bps WoW |
Source: Colombo Stock Exchange market data, Central Bank of Sri Lanka statistics and publicly available market information.