Equities closed lower on broad profit-taking while short-term Treasury yields dropped sharply and the rupee firmed against the dollar
Key Highlights
Sri Lankan equity and fixed income markets moved in different directions in the latest session. The Colombo Stock Exchange closed lower amid broad-based profit-taking, while short-term Treasury bill yields fell sharply at the latest auction. The rupee appreciated modestly against the US dollar, and banking system liquidity contracted.
Stock Market Summary
The ASPI declined 137.81 points, or 0.64%, to close at 21,479.07, while the S&P SL20 fell 43.63 points, or 0.72%, to 6,040.91. Market turnover totalled LKR 2.04 billion, remaining 33.7% below the monthly average of LKR 3.1 billion. Volume rose sharply to 80.22 million shares, largely driven by a single crossing in John Keells Holdings. The Capital Goods sector led turnover with a 49% share. Foreign investors were net sellers, with a net outflow of LKR 606.0 million for the day, month-to-date outflows of LKR 18.6 billion, and year-to-date outflows of LKR 54.9 billion.
Fixed Income Summary
Treasury bill yields fell across all tenors at the latest primary auction: the 91-day rate dropped 33 basis points to 9.44%, the 184-day fell 21 basis points to 9.78%, and the 364-day eased 18 basis points to 10.01%. Secondary market bond yields were broadly lower week-on-week across most tenures, though the 10-year (2036) maturity rose 10 basis points, a notable exception. Banking system liquidity contracted to LKR 292.85 billion from LKR 301.35 billion in the prior session.
Currency Market Update
The rupee appreciated against the US dollar, trading at LKR 332.29 compared to LKR 333.09 previously, a modest gain of roughly 0.24%.
Business Impact
The session presented a mixed picture for businesses: falling short-term borrowing costs contrast with sustained foreign equity outflows and tightening banking liquidity. Corporates evaluating near-term financing may find short-tenor rates increasingly favourable, while businesses monitoring capital markets as a gauge of external investor sentiment should note the continuation of the year-long foreign selling trend on the equity side.
What to Watch Next
Market participants will be watching whether the divergence between falling short-term yields and contracting system liquidity persists, along with whether foreign equity outflows continue at their current pace into the new trading month.
Key Numbers
| Metric | Value |
|---|---|
| ASPI | 21,479.07 (-0.64%) |
| S&P SL20 | 6,040.91 (-0.72%) |
| Market Turnover | LKR 2,036.91 Mn |
| Net Foreign Flow (Day / MTD / YTD) | -LKR 606.0 Mn / -LKR 18,611.0 Mn / -LKR 54,891.3 Mn |
| 91-Day T-Bill Yield | 9.44% (-33 bps) |
| USD/LKR | 332.29 (from 333.09) |
| Banking System Liquidity | LKR 292.85 Bn (from LKR 301.35 Bn) |
Source Attribution
Source: Colombo Stock Exchange market data, Central Bank of Sri Lanka statistics and publicly available market information.