Sri Lanka’s stock market experienced a rebound on Friday, ending a three-day fall as buying interest returned to the banking and financial sectors. This renewed interest may be short-lived, however, as investors are still waiting for more clarity on the restructuring of domestic debt, following the approval of a loan from the International Monetary Fund (IMF).
All Share Price Index (ASPI) Up by 0.25 Percent
The All Share Price Index (ASPI) rose by 0.25 percent or 23.37 points to close at 9,419.35. The banking and financial sectors were the main contributors to this rise, having previously dragged down the market due to fears of domestic debt restructuring. Despite this, most commercial banks’ share prices remained down as investors continued to wait for more information.
Options for Restructuring Domestic Debt
Sri Lanka is currently considering options to restructure its domestic debt, also known as local law local currency debt (LLLC), without harming the banking sector. The IMF has stated that the country will announce these options soon. This news is expected to ease selling pressures as the IMF hopes to reduce inflationary pressures, which should lead to reductions in interest rates.
S&P SL20 Index Up by 0.09 Percent
The S&P SL20 index, which is the most liquid index, closed up by 0.09 percent or 2.58 points at 2,752.52. The market saw a turnover of 1.9 billion rupees on Friday, which is slightly above this year’s daily average of 1.8 billion rupees. The net foreign outflow for the day was 597 million rupees, but the total offshore inflows recorded so far in 2023 were 2.7 billion rupees.
Banking Sector Leads the Way
Despite the foreign outflow on Friday, most of the inflows were directed towards the banking sector, which helped push the index up. The top gainers for the day were Sampath Bank, Melstacorp, and Commercial Bank.
In conclusion, the Sri Lankan stock market saw a slight rise on Friday as buying interest returned to the banking and financial sectors. While this renewed interest is encouraging, investors are still awaiting further details on the restructuring of domestic debt, which is expected to ease selling pressures and lead to reductions in interest rates. Despite this, the banking sector remains strong, with most of the inflows on Friday directed towards it.