The stock market yesterday plunged sharply with over Rs. 12 billion in value lost as investors lost faith in short and medium prospects of the country following the midnight aerial attack by the LTTE on the Katunayake Air Force base.
Panic selling was evident though turnover was relatively low as the market capitalization plunged by Rs. 11.8 billion yesterday to close at Rs. 880 billion from Rs. 892 billion on Friday. Both indices declined by over 1% while foreigners were net sellers too.
`Activity levels were low with selling pressure forcing the indices lower as investors exercised caution following news of a terrorist airstrike on an Air Force base early this morning,` John Keells Stock Brokers said.
Analysts noted that the market has been lackluster throughout last week and the news of LTTE air attack worsened investor sentiment. However some took comfort from the fact that the attack didn`t cause extensive damage as in the case of July 2001 incident at the airport.
The proactive efforts with regard to damage control on the part of defence officials and tourism industry helped restore the country`s image to some extent but concerns remained. In that context some analysts are hopeful that investor confidence would gain while there was agreement that the latest attack would prompt either an all out effort to crush the tigers or pressure from the international community on both parties to get down to peace talks immediately.