Sri Lanka’s main stock index plunged almost 2% on Monday amid panic selling by retail investors on policy uncertainties. Benchmark All Share Price Index sank to a two week low of 7,366.68 recording drop of 147.18 points (-1.96%) which is the highest intra-day drop since 24th Nov 2014. S&P SL 20 index lost 103.67 points (-2.44%) to end at 4,144.36. The market dropped by 239.11 points in last four sessions and has now erased almost all of the 4% percent gains which it posted during the New Year.

Price depreciation in large cap counters such as Commercial Bank (closed at LKR 180.00, -4.4%), John Keells Holdings (closed at LKR 237.00, -1.5%) and Sri Lanka Telecom (closed at LKR 50.50, -3.4%) affected adversely to the index performance.

Daily market turnover recorded a two week low of LKR 860mn. Access Engineering emerged as the top contributor to the market turnover with LKR 96mn. The share price of Access Engineering dropped considerably during the session subsequent to the press article on the suspension of the northern expressway and the investors’ expectations on possible cancellation of orders given to construction companies. The counter closed at LKR 27.00, -10%.

Commercial Bank was the next best contributor to the turnover with LKR 81mn underpinned by the single crossing (0.4mn shares at LKR 180.00 per share) recorded for the day. Further John Keells Holdings (LKR 60mn) and National Development Bank (LKR 37mn) recorded next best contributions to the market turnover.

Losers surpassed the gainers 202 to 23 while 27 counters remained unvaried. Cash map declined to 31% from 45%. 13 counters dropped to 52wk low price levels while Ceylinco Insurance (closed are LKR 1,500.00, +7.7%) and Arpico Insurance (closed at LKR 15.20, +7.8%) reached 52wk high price level.

Moreover shares of Access Engineering, Arpico Insurance Limited and Union Bank were among heavily traded stocks during the session.

Furthermore, the entire high cap banking sector counters such as Commercial bank (-4.4%), Hatton National Bank (-3.8%), National Development Bank (-2.5%), Sampath Bank (-1.2%) and DFCC Bank (-1%) declined today.

Foreign investors were net buyers for the second consecutive day with net inflow of LKR 80mn. Foreign participation reached 17%. Net foreign inflows were seen in counters such as John Keells Holdings (LKR 35mn), People’s Leasing & Finance (LKR 23mn) and Tokyo Cement (LKR 13mn) while net foreign outflow was mainly seen in Commercial Bank (LKR 13mn).

Lanka Orix Finance informed that their LKR 5bn debenture issue was oversubscribed and therefore the issue was closed today.

Lanka Securities Research