The Colombo Stock Exchange (CSE) was a tale of two markets last week, as a colossal Rs. 37 billion turnover driven by domestic titans was starkly contrasted by a massive withdrawal of foreign capital. A blockbuster acquisition in the consumer foods sector kept the market buzzing, but the accelerated flight of international investors has painted a troubling picture for the island nation’s financial landscape.
The week ending October 17, 2025, saw the market sustain its “decade-high trading frenzy,” propelled almost exclusively by local institutional investors whose enormous block trades dictated the market’s bullish direction.
Big Money Goes Bigger as Domestic Dominance Intensifies
Total equity turnover for the week held firm at a staggering Rs. 37.22 billion, but the underlying composition shifted dramatically. Domestic players were not just in the driver’s seat; they owned the entire road. Domestic trading accounted for an overwhelming 96% of the total turnover, with transactions worth Rs. 35.89 billion.
This torrent of local capital continued to be channelled through vast, block-sized trades. Significant crossing transactions—large, negotiated trades made off the regular trading board—were a daily feature, with major deals seen in Tokyo Cement, DFCC Bank, and Hemas Holdings.
While the monetary value remained concentrated, the number of trades increased to over 204,000 from the previous week’s 174,419, suggesting a broadening of market engagement even as the market’s direction is set by a handful of domestic heavyweights.
Hayleys’ Blockbuster Deal Sends Harischandra Shares to Stratospheric Highs
The week’s headline event was the dramatic acquisition of a controlling stake in the legacy food manufacturer, Harischandra Mills PLC, by the diversified conglomerate Hayleys PLC. The deal, which saw Hayleys purchase 40.58% of Harischandra from Senthilvel Holdings (Pvt) Limited, was valued at over Rs. 2.57 billion.
The transaction, executed at Rs. 3,300 per share, had an immediate and explosive impact on Harischandra’s stock price. The share, which closed the previous week at Rs. 2,600, not only closed at Rs. 5,850 but hit a stratospheric intra-week high of Rs. 7,424.50, marking an extraordinary 125% gain on its closing price. This single corporate action highlighted how strategic domestic moves are fuelling the current market climate.
Market Indices Climb as Foreign Investors Run for the Exits
Supported by the high-value domestic activity, the benchmark All Share Price Index (ASPI) continued its upward trajectory. The index gained 315.08 points during the week, a 1.4% increase, to close at 22,633.80. This pushes the ASPI’s year-to-date gain to an impressive 41.95%.
However, this domestic optimism was met with a brutal verdict from foreign investors. The trend of foreign capital outflows intensified dramatically, with a net withdrawal of Rs. 3.14 billion for the week. This massive capital flight reverses any recent glimmers of international confidence and suggests a deep-seated caution among foreign players about the Sri Lankan market’s stability.
Sector Movers and Shakers
The market’s gains were not uniform, with specific sectors showing significant volatility. The Diversified Financials sector was a hotbed of activity, with Merchant Bank (+93.33%) and Sarvodaya Development Finance (+71.36%) joining Harischandra among the week’s top performers. The Food & Staples Retailing and Real Estate sectors also recorded strong index growth.
On the other end of the spectrum, the Utilities and Capital Goods sectors faced headwinds. Panasian Power was the week’s biggest loser, shedding 12.23% of its value. It was followed by capital goods firms Luminex (-9.33%) and Kelani Cables (-9.07%), indicating that investor enthusiasm was not universal across the market.
Sanctions Cast Shadow Over LAUGFS Gas
Adding a layer of geopolitical risk to the market’s dynamics, LAUGFS Gas PLC announced that its Dubai-based subsidiary, SLOGAL Energy DMCC, was suspending operations. The move came after the subsidiary was hit by sanctions from the U.S. Treasury over alleged links to the trade of Iranian liquified petroleum gas.
The news introduced significant volatility for the energy company’s stock, underscoring how external geopolitical events can have rapid and unpredictable impacts on specific equities, irrespective of the broader domestic market trends. While the stock showed a slight gain for the week, the long-term implications of the sanctions remain a key concern for investors.
The week’s trading activity paints a picture of a market brimming with local confidence but increasingly isolated, as the chasm between bullish domestic sentiment and fleeing foreign capital grows ever wider.