Equities recovered modestly on thin turnover while government securities yields rose across most tenors and the LKR weakened marginally against the USD
Key Highlights
The Colombo Stock Exchange closed marginally higher, while the government securities market saw yields rise across most tenors on a weekly basis. The rupee weakened slightly against the US dollar, and banking system liquidity expanded.
Stock Market Summary
The All Share Price Index (ASPI) gained 32.83 points, or 0.16%, to close at 21,056.26, while the S&P SL20 added 3.93 points, or 0.07%, to finish at 5,928.89. Daily turnover totaled LKR 1.34 billion, a decline of 43.1% against the monthly average of LKR 2.3 billion, while trading volume fell to 39.36 million shares. The Capital Goods sector led activity with a 27% share of turnover, followed by the Banking and Materials sectors, which together accounted for 32%. Foreign investors were net sellers for the session, recording an outflow of LKR 5.91 million, against a month-to-date net outflow of LKR 1.11 billion and a year-to-date net outflow of LKR 56.85 billion. Market capitalization stood at LKR 7,642.25 billion.
Fixed Income Summary
Government securities yields rose across most points on the curve on a week-on-week basis, with gains ranging from 18 to 55 basis points, led by the 2-year tenor. At auction, Treasury bill yields also moved higher across all three maturities: the 91-day rose 15 basis points to 9.18%, the 182-day rose 12 basis points to 9.36%, and the 364-day rose 11 basis points to 9.88%. Secondary market activity was concentrated in mid-tenor bonds, where trading was comparatively thin. Foreign holdings of government securities rose 1.31% week-on-week to LKR 213.4 billion. Banking system liquidity expanded to LKR 324.79 billion, up from LKR 317.84 billion previously.
Currency Market Update
The Sri Lankan rupee depreciated marginally against the US dollar, closing at LKR 332.13 compared to LKR 331.89 in the previous session.
Business Impact
Rising Treasury yields signal firming government borrowing costs, a factor businesses and financial institutions will watch as a reference point for lending rates. Continued net foreign outflows from equities, despite a positive day for the index, point to cautious foreign positioning that exporters and import-dependent businesses should monitor alongside currency movements.
What to Watch Next
Market participants will be watching whether the rise in Treasury yields persists into coming sessions, along with further movement in the USD/LKR rate and the trajectory of foreign equity flows against their weak year-to-date trend.
Key Numbers
| Metric | Value |
|---|---|
| ASPI | 21,056.26 (+0.16%) |
| S&P SL20 | 5,928.89 (+0.07%) |
| Turnover | LKR 1.34Bn |
| Foreign flow (equity) | -LKR 5.91Mn |
| USD/LKR | 332.13 |
| Banking system liquidity | LKR 324.79Bn |
| 91-day T-bill yield | 9.18% (+15bps) |
Source: Colombo Stock Exchange market data, Central Bank of Sri Lanka statistics and publicly available market information.