Stock market trading ends prematurely as heavyweights take a beating

• Brokers say profit taking and gloomy quarterly earnings expectations also among reasons  

The Colombo Stock Exchange (CSE) yesterday closed trading prematurely with the S&P SL20 index breaching the 5 percent decline threshold amid profit taking and falling freight rates and crude oil prices.

“Please note that the market has been halted due to the S&P SL20 index dropping over 5 percent from the previous close, as set out in SEC Directive dated April 30, 2020. Accordingly, the market has been halted for the rest of the day,” the CSE said. 

The main All Share Price Index (ASPI) was down by 281.21 points or 2.83 percent to close at 9,649.86 points while the more liquid S&P SL20 index fell 116.46 points or 3.68 percent to 3,048.87 points at yesterday’s market closure.
The market turnover declined marginally by 1.7 percent to Rs.2.53 billion. 

“This is a temporary setback mainly due to profit taking and declining global freight rates. However, we expect the market to further decline over next few days,” First Capital Research (FCR) Head of Research Dimantha Mathew told Mirror Business. 

Amid declining global freight rates, Expolanka Holding PLC shares were sharply down by Rs.20.25 or 9.31 percent to Rs.197.2.

 Lanka IOC shares declined by Rs.15 or 5.19 percent to Rs.273.75, as global oil prices continue to fall amid gloomy economic outlook. The two heavyweights contributed to over Rs.1 billion market turnover yesterday. 
In addition, Mathew noted that the gloomy quarterly earnings expectations are also impacting the current investor sentiment.

FCR expects the ASPI to remain around 9000-10,0000 points at the end of this year, with expectations for the index to improve around 12,000 points by end of next year.