The Colombo bourse is likely to see a cooling-off period in relation to its blue chip shares although there is still room for mid-cap shares to move upwards, according to market sources.
Speaking to The Sunday Morning Business, First Capital Holdings Chief Research and Strategy Officer Dimantha Mathew stated that despite the bull run in the market over the past few months, there was still an upside of around 20-25% in blue chip counters.
However, he conceded that it was possible that the market might see a cooling-off period for a while before fresh buying recommenced.
He stated: “The market has now reached a level where it is no longer a free ride for investors. Therefore, they will now have to shift to mid-cap, second-tier stocks, which may not really move the index per se.”
Adding that there continued to be value in the market for investors, he pointed out that second-tier banking stocks such as DFCC Bank and NDB Bank had a great deal of upside potential.
Similarly, he pointed out that Budget 2025 had proposed many benefits for the consumer and construction sectors and therefore there was potential in these sectors for investors.
“This will not be the year for blue chips. We can identify 2025 as the year for the consumer sector,” Mathew asserted.
He also pointed out that the Government’s removal of the import ban on vehicles could be the impetus for Non-Banking Financial Institutions (NBFI) to start moving, as the sector was somewhat undervalued.
The benchmark All Share Price Index (ASPI) has been on a record-breaking bull run since September 2024, which saw the index gain close to 7,200 basis points from 10,575 basis points to its new all-time high of 17,193.79 basis points on Monday (17) in the immediate aftermath of the announcement of Budget 2025.
However, since the beginning of February, the market has been volatile due to investors looking to book their profits.
A similar trajectory was observed in Standard & Poor’s Sri Lanka 20 (S&P SL20) index, which has also gained over 2,250 basis points since September 2024, reaching its all-time high of 5,183.96 basis points on 23 January from 2,925 basis points on 12 September 2024.
After some volatility in early February, it rebounded to 5,136.58 points on Monday.