CSE slides sharply as Middle East tensions trigger broad-based selling

By Almas Equities Research

The Colombo Stock Exchange (CSE) commenced the week under significant pressure, with both benchmark indices recording sharp losses as escalating tensions in the Middle East continued to dampen investor confidence. Concerns over the potential economic implications of a prolonged conflict, particularly on energy prices and Sri Lanka’s external sector, fueled a risk-off sentiment among market participants.

Investor activity remained subdued throughout the session as many adopted a cautious wait-and-see approach amid heightened geopolitical uncertainty. The lack of positive catalysts and growing concerns over the broader economic impact of global developments led to widespread selling across the market. Nevertheless, selective buying interest in a handful of fundamentally strong counters provided some support, highlighting continued participation by value investors despite the prevailing weakness.

The All Share Price Index (ASPI) declined by 340.85 points, or 1.57%, to close at 21,403.28, while the S&P SL20 Index fell by 55.58 points, or 0.92%, to settle at 5,968.42.

Market turnover amounted to LKR 2.61 billion, with 88.14 million shares changing hands during the session. Trading activity was largely driven by the Capital Goods sector, which contributed LKR 0.96 billion in turnover from 30.56 million shares traded. JKH.N emerged as the sector’s top contributor, generating LKR 0.45 billion in turnover with 23.02 million shares traded.

Crossing transactions accounted for LKR 0.59 billion, representing 22% of total market turnover. The largest crossing was recorded in JKH.N, amounting to LKR 0.37 billion involving 18.95 million shares.

Market breadth deteriorated significantly, with only 20 gainers against 212 decliners, underscoring the broad-based selling pressure that prevailed throughout the session.

Among the positive contributors to the index, DIAL.N led gains with a contribution of 5.66 points, followed by HNB.N, MAL.N, COOP.N, and ABAN.N. On the downside, MELS.N emerged as the largest drag on the ASPI, shaving off 24.72 points, while BUKI.N, HAYL.N, SAMP.N, and LOLC.N also weighed heavily on market performance.

Among notable trades, ACL.N attracted considerable investor interest, recording a turnover of LKR 0.19 billion with 2.07 million shares traded. However, the counter closed 2.38% lower, reflecting the broader weakness that dominated market sentiment during the session.