Amid turnover dip, indices climb buoyed by fresh foreign capital
Analysis: The Colombo Stock Exchange (CSE) closed the week ending 3 October 2025 with a curious juxtaposition: key market indices posted solid gains, yet the overall value of trade declined.
The rise appears to be underpinned by a significant reversal in foreign investment flows, which registered a net inflow for the first time in recent reporting.
The benchmark All Share Index (ASPI) surged by 495.90 points, closing at 22,094.89, up from 21,598.99 the previous week.
Similarly, the blue-chip oriented S&P SL 20 Index advanced by 75.94 points to finish at 6,187.51. This momentum saw the total market capitalisation expand substantially, growing from Rs. 7.685 trillion to Rs. 7.860 trillion.
However, the headline figure for the week’s activity—the Total Turnover Value—experienced a notable dip, falling to Rs. 33.295 billion from Rs. 35.531 billion the week before.
This suggests that while market sentiment was positive in driving up stock prices and overall valuation, the liquidity and high-value transactions that define turnover were somewhat constrained.
Foreign Capital Reverses Course
The most compelling story of the week lay in the foreign investment activity, which switched from a net outflow to a net inflow of Rs. 389.66 million.
This shift is particularly striking, considering the previous week had seen a net outflow of Rs. 236.58 million.
The turnaround was driven by two factors: foreign purchases rose marginally to Rs. 1.409 billion, while foreign sales decreased dramatically, falling from Rs. 1.470 billion to just Rs. 1.020 billion.
This indicates that overseas investors were net buyers, withdrawing less capital and selectively increasing their positions.
This influx of foreign capital, while modest in the context of the overall market, coincided directly with the improved market valuation metrics. The Market Price-to-Earnings (P/E) Ratio rose from 9.51 to 9.72, and the Price-to-Book Value (PBV) Ratio increased from 1.42 to 1.45.
These movements signal growing investor confidence, with foreign interest likely contributing to the perceived higher valuation multiples.
Volume and Trading Dynamics
While the value of trade decreased, the volume of trade increased, with the Total Share Volume climbing to 1.143 billion shares, up from 1.096 billion.
This disconnect—more shares traded for less money—implies that domestic activity was focused heavily on lower-priced stocks, a view supported by the fact that Domestic Volume rose significantly while Domestic Purchases value simultaneously decreased.
The total number of trades remained stable at nearly 200,000 for the five trading days, reflecting consistent domestic engagement even with reduced high-value transactions.
Performance Highlights: DIMO’s 33% Spike
The week’s top percentage gainer was DIMO, which recorded a massive 33.16% price change, closing at Rs. 2,235.50. This exceptional performance contributed significantly to the broader index movement, ranking as the second-highest point contributor to the ASPI.
Other notable gainers included ACL Plastics, up 31.21%, and Dialog Finance, which gained 28.36%.
Conversely, the top percentage loser was AMF Co Ltd, which shed 25.85% of its value, falling from Rs. 91.70 to Rs. 68.00.
The losers list also highlighted vulnerability in the leasing sector, with both S M B Leasing [X] and S M B Leasing featuring in the top five percentage losses, falling by 25.00% and 12.50% respectively.
Index Movers and Crossings
While DIMO captured the largest percentage gain, the single greatest influence on the ASPI’s absolute movement came from Melstacorp (MELS), which contributed a decisive 123.51 points to the index rise.
The agricultural holding company, Bukit Darah (BUKI), was the third largest contributor with 18.6 points.
Melstacorp, along with Commercial Bank and Dipped Products, was highly prominent in ‘crossings’—large block trades—throughout the week, indicating intense institutional and high net-worth activity in these select blue-chip stocks.
LCB Finance PLC also saw a substantial volume of crossing activity, with millions of shares changing hands on the final day, likely contributing to the overall spike in Total Share Volume.
In summary, the CSE continues to show resilience, with positive foreign interest providing key support for rising indices and market valuation, despite an overall thinning of trading value.
The market narrative for the coming weeks will likely centre on whether this renewed foreign inflow can be sustained and if domestic liquidity can return to boost overall turnover.
The report is based on a weekly comparison of the Colombo Stock Market between the week ended 03.10.2025 and the week ended 26.09.2025.