It was a sluggish week for the Colombo Bourse with weakened investor sentiment and quite low overall investor participation. Market declined in value over the week, however evidenced a slight recovery towards the end, closing the week on a green zone.
The key elements for the market nose dive in our view are, tightened liquidity owing to the higher frequency of unveiling IPOs and margin calls which hinders the free float.
The benchmark ASPI plunged 181.89 points (2.52%) WoW to close at 7,050.03 points, while the sensitive MPI diminished 175.01 points (2.58%) WoW ending at 6,600.87 points.
The turnover for the week was LKR 11.5 bn with a total of 868mn shares changing hands. The average daily turnover stood at LKR 2.88bn, down 27.2% WoW.
Foreign investors were on a purchasing spree during the week generating a net inflow of LKR 761.94 mn. Foreign purchases for the week stood at LKR 1,178.48 mn while foreign sales were LKR 416.54mn.
In our view, we expect the market to perform at current levels, ahead of more IPOs in the pipeline that act as a bottleneck for the streamline operation of the market. However, this may invite speculation to rule the market in the short term. Hence it is advisable to invest based on fundamentally strong stocks in view of long term gains while making the right call at the right time.