Equities edged lower and secondary bond yields firmed as investors positioned ahead of Thursday’s Treasury bond auction
Key Highlights
The Colombo Stock Exchange closed lower on September 10, with the All Share Price Index (ASPI) falling 108.26 points, or 0.50%, to 21,357.74. The S&P SL20 index of blue-chip counters declined 29.95 points, also down 0.50%, to close at 6,003.92. In fixed income markets, secondary trading was thin ahead of Thursday’s bond auction, while yields on medium-term maturities moved higher over the week. The rupee held broadly steady against the US dollar.
Stock Market Summary
Daily turnover came in at LKR 1.45 billion, up from LKR 972 million the previous session but still 44.4% below the monthly average of LKR 2.6 billion. Trading volume totaled 35.08 million shares, down 18.6% day-on-day. The Banking sector accounted for 41% of turnover, with Capital Goods and Diversified Financials contributing a further 25% between them, indicating trading activity remained narrowly concentrated. CPRT led gainers, adding 19%, while AUTO led losers, down 9%. MELS, BREW, DIAL, CARS and CARG were the largest drags on the index. Market capitalization stood at LKR 7.75 trillion (USD 23.16 billion), down 0.5%. Foreign investors were net buyers on the day, with inflows of LKR 32.15 million against outflows of LKR 16.02 million, for a net inflow of LKR 16.13 million. On a month-to-date basis, foreign flows remain negative at LKR 678.5 million in net outflows, and net outflows stand at LKR 56.4 billion year-to-date.
Fixed Income Summary
Secondary market activity was limited as participants awaited Thursday’s Treasury bond auction, where LKR 150 billion is on offer across three re-issued maturities: 10.00% 2030’A’ (LKR 70 billion), 11.70% 2034’A’ (LKR 50 billion) and 10.75% 2037’A’ (LKR 30 billion). The 15.10.2030 maturity last changed hands at 10.75%, while the 15.10.2034 maturity traded at 11.85%. Weekly yield movements were mixed but skewed upward across the belly of the curve, with the 3-year bid yield rising 20 basis points and the 5- and 7-year tenors each up 15 basis points. Short-tenor Treasury bill yields from Tuesday’s auction eased slightly, with the 184-day and 364-day rates down 3 and 4 basis points respectively, while the 91-day rate rose 7 basis points. Banking system liquidity expanded to LKR 366.20 billion from LKR 363.14 billion.
Currency Market Update
The rupee appreciated marginally against the US dollar to LKR 328.75, from LKR 328.77 previously. It also gained against the Australian dollar and Chinese yuan, while losing ground against the British pound, euro and Japanese yen. Separately, the Central Bank of Sri Lanka reported that official foreign reserves rose 4.6% month-on-month to USD 6,905 million in August, up from USD 6,600 million in July.
Business Impact
The narrow, banking-led trading pattern points to selective institutional activity rather than broad-based market conviction, a dynamic worth watching for listed banks’ share liquidity. Rising medium-term bond yields ahead of Thursday’s auction signal firmer near-term borrowing costs for the government and could feed through to corporate lending benchmarks if sustained. The rupee’s stability and the reserve build-up offer some reassurance to importers on near-term currency risk, though the persistent year-to-date foreign equity outflow remains a signal that foreign institutional appetite for Sri Lankan equities has not meaningfully turned.
What to Watch Next
Results of Thursday’s LKR 150 billion Treasury bond auction, phase two results of the Treasury bill auction, and whether banking-sector concentration in equity turnover persists into the new week.
Key Numbers
| Metric | Value | Change |
|---|---|---|
| ASPI | 21,357.74 | -108.26 (-0.50%) |
| S&P SL20 | 6,003.92 | -29.95 (-0.50%) |
| Turnover | LKR 1.45Bn | -44.4% vs monthly avg |
| Volume | 35.08Mn shares | -18.6% |
| Market Cap | LKR 7.75Tn (USD 23.16Bn) | -0.5% |
| Foreign Net Flow (day) | +LKR 16.13Mn | — |
| Foreign Net Flow (MTD) | -LKR 678.5Mn | — |
| Foreign Net Flow (YTD) | -LKR 56.42Bn | — |
| USD/LKR | 328.75 | +0.02 (marginal appreciation) |
| Official Reserves (Aug-26) | USD 6,905Mn | +4.6% MoM |
| Banking System Liquidity | LKR 366.20Bn | +LKR 3.06Bn |
Source Attribution
Source: Colombo Stock Exchange market data, Central Bank of Sri Lanka statistics and publicly available market information.