Market plunges over 4% amid worsening power crisis, margin pressure  

With the worsening power crisis limiting trading to two hours, the Colombo bourse yesterday plunged by over 4 percent on margin selling as investors await cues from the authorities as to 
how they are going to resolve the country’s worst economic crisis since independence.

The market was halted for 30 minutes yesterday, as the circuit breaker went active and S&P SL20 index fell by 5.0 percent. The main index, the All Share Price Index (ASPI), fell by 391.02 points to close at 8,903.87 points.
 “Downward trend was further accelerated more in 
line with Wednesday’s performance when two circuit breakers went active. So far this week alone, ASPI lost almost 1500 points.

 By this month-end, which is also the end of this FY, we think all margin providers will re-adjust their portfolios to regulate portfolios according to the rules. There was lots of forced selling last couple of days. All the portfolios have also declined significantly,” First Capital Research (FCR) Head of Research Dimantha Mathew told Mirror Business.

As of yesterday, market capitalisation of CSE had fallen by 30.3 percent or 1.6 trillion so far this year.

Meanwhile, The Colombo Stock Exchange (CSE) in consultation with the Securities and Exchange Commission of Sri Lanka (SEC) decided to restrict trading hours from 10.30 a.m. to 12.30 p.m. yesterday (31) and today due to the worsening power crisis after considering a request made by stock broker firms.

CSE noted that the position would be reviewed over the weekend.

However, Mathew opined that this decision didn’t have much impact over the market performance yesterday as investors had already felt the consequences of the power crisis. He expects the market stagnation to continue until the government enters into an International Monetary Fund (IMF) programme and subsequent debt restructuring talks.