The Colombo Stock Exchange (CSE) displayed a subdued response to the National People’s Power (NPP) party’s historic landslide victory in last week’s General Election. Despite the NPP securing a supermajority in Parliament and setting several election records, the stock market remained indifferent on its first day of trading following the election.
On the day after the election, the benchmark All Share Price Index (ASPI) saw a modest gain of just 0.2%, and the active S&P SL20 index increased by only 0.08%. Turnover, however, was above average, reaching Rs. 5.5 billion with 223.5 million shares changing hands. In comparison, the week before the election, the ASPI had gained 3.1% and the S&P SL20 had increased by 3.8%.
While the NPP’s victory was historic—winning 159 seats, the highest percentage of votes ever in a General Election (61.56%), and breaking records in electoral divisions—the market response appeared largely indifferent. Analysts suggested that much of the market’s positive movement had already occurred before the election, as investors anticipated a strong mandate for the NPP.
Despite the lackluster reaction, the ASPI has shown strong growth in 2024. Year-to-date, the index is up by 25%, and the S&P SL20 has risen by 29.7%. This growth has been driven by political stability and investor confidence, as well as a rally in the broader market. Analysts noted that the political stability following the election results had helped maintain positive sentiment.
The Banking sector played a significant role in the market’s performance, with Commercial Bank, Hatton National Bank, and Sampath Bank leading turnover contributions. Other sectors, such as Capital Goods and Food, Beverage, and Tobacco, also saw active trading.
While foreign investors continued to be net sellers, with a net outflow of Rs. 761.2 million, local institutional investors and high-net-worth individuals showed increased participation in top stocks like John Keells Holdings, Sampath Bank, and Ambeon Capital.
Looking ahead, the CSE’s performance will continue to depend on how the new political landscape and investor sentiment evolve. While the NPP’s win marks a significant political shift, it remains to be seen whether the stock market will fully react to the historical results in the coming weeks.