• First Capital revises 2026 forecast upward as corporate earnings strengthen
• Equity market surpasses previous targets after record-setting rally
• ASPI gains over 4,000 points since April low, driven by capital inflows
• Bull run follows brief correction period triggered by external market shocks

Market sources have revised their projections for the All-Share Price Index (ASPI) for 2026 to a range between 21,000 and 22,000 points on the expectation of stronger corporate earnings and amidst the record-breaking bull run currently observed in the Colombo bourse.

Speaking to The Sunday Morning Business, First Capital Holdings Manager – Research Ranjan Ranatunga stated that they had revised their target for 2025 from a range of 18,000-19,000 points to 19,000 points. 

However, driven by improved corporate earnings and a fresh surge of capital inflows, the equity market has comfortably exceeded these targets, consistently posting record highs over the past several weeks.

On the backdrop of this performance of the Colombo Stock Exchange (CSE), Ranatunga stated that they had decided to revise their target for the benchmark ASPI, adding that they now believed the market would hit a range between 21,000 and 22,000 points in 2027.

He further justified such revisions, stating: “Our expectation is that the low interest rates will continue for at least the next 6-12 months. Together with that, we will see corporate earnings also rising. We are expecting a 25% growth in corporate earnings in 2025, followed by a 17% growth in 2026.”

He also pointed out that amidst the low interest rate regime, First Capital Holdings had observed a shift in asset classes.

“People who have had fixed interest assets have now started moving into the equity market. This influx of new cash into the market is what is driving the market,” he stated.

The recent bull run in the market comes on the back of an extended bearish cycle, which saw the ASPI fall by over 2,500 basis points during February and March, resulting in the index falling from 17,193.79 basis points on 18 February to a low of 14,675.26 basis points on 7 April. 

Since then, the ASPI has been trending upwards at a historic pace, which saw it surpass the 19,000 basis points mark in recent weeks for the first time in the capital market’s history.

The bearish sentiments in the market over the February-March period had been largely due to external market uncertainties rather than fundamentals.

Despite surpassing the 19,000 basis point level, the ASPI has not shown any signs of slowing down and continued its upwards surge last week as well, which saw it gain close to 350 basis points.