Stocks extend surge with net foreign inflow of Rs.1.5bn

• CSE maintains upward momentum for fifth consecutive session, witnessing record net foreign inflow
• Yesterday’s net foreign inflow reached Rs. 1.51 billion (US$ 4.8bn), highest since December 21, 2022.
• Foreigners show keen interest in banking stocks, particularly NDB, LOLC, ComBank, and HNB
• Turnover stands at Rs. 6.62bn with foreign investors contributing 15%

The Colombo Stock Exchange maintained its upward momentum for the fifth consecutive session yesterday as foreign investors made significant contributions, resulting in the highest net foreign inflow to the market in recent times.
Yesterday’s net foreign inflow stood at Rs. 1.51 billion (US$ 4.8bn), with foreigners buying stocks worth Rs. 1.7 billion and selling Rs. 265.4 million worth shares. This marked the highest net foreign inflow of Rs. 2.9 billion recorded since December 21, 2022. Banking stocks attracted significant foreign interest, particularly with NDB witnessing foreign buying amounting to Rs. 547.8 million. 
Additionally, foreigners purchased Rs. 157.3 million worth LOLC shares, Rs. 155 million worth ComBank shares, and Rs. 138.6 million worth HNB shares. Foreigners also bought Rs. 1,793 million worth JKH shares.
Yesterday’s turnover was Rs. 6.62 billion, and market capitalisation stood at Rs. 4.58 trillion, recording 0.84 percent gain over the last session.
Foreign investors accounted for 15 percent of yesterday’s turnover, while the year-to-date foreign participation stood at 9 percent.
Meanwhile, the All Share Price Index (ASPI) gained 135.51 points or 1.18 percent yesterday, closing at 11,582.34, while the more liquid S&P SL20 Index gained 68.61 points or 2.07 percent, closing at 2,289.67.
“The banking sector was the top contributor to the market turnover (due to National Development Bank, Hatton National Bank, and Pan Asia Banking Corporation) whilst the sector index gained 3.09%. 
The share price of National Development Bank increased by Rs. 1.00 (1.25%) to close at Rs. 80.90. The share price of Hatton National Bank moved up by Rs. 3.50 (1.78%) to close at Rs. 200.00. The share price of Pan Asia Banking Corporation recorded a gain of Rs. 2.00 (12.05%) to close at Rs. 18.60,” NDB Securities said.
Banking stocks have been moving up since the domestic debt restructuring deal approved by parliament recently had little impact on the banking sector, contrary to previous beliefs.
Sri Lanka’s economy is showing signs of gradual recovery after reaching its lowest point last year following the debt default.
The country was able to secure a US$ 3 billion deal from the International Monetary Fund and has been able to bring inflation, which was running at almost 70 percent last year, to little over 6 percent in July.
The rupee has also gained against the US dollar amid improved inflows through tourism receipts and workers’ remittances.
According to the Central Bank, the country’s foreign reserves have improved to US$ 3.7 billion by the end of June.
The Central Bank delivered back-to-back policy rate cuts to the tune of 4.5 percent in June and July, resulting in significantly reduced market interest rates, though they still remain relatively higher.
According to the Finance Ministry, about 95 percent of dollar-denominated Sri Lanka Development Bond holders, both institutional and individual, have agreed to exchange their existing bonds for long-term rupee-denominated bonds under the domestic debt restructuring programme, which is currently being finalised.
The government is expected to finalise a debt restructuring deal with its foreign creditors before the first review of the IMF programme, scheduled for September.