First Capital Holdings PLC, a subsidiary of JXG (Janashakthi Group) and a key player in Sri Lanka’s capital markets landscape, has maintained its outlook for Sri Lanka’s fixed income and equity markets, forecasting stable bond yields through 2026 while identifying potential opportunities emerging in 2027 as economic conditions improve.

According to the First Capital Mid-Year Outlook 2026, bond yields are expected to remain within current forecast ranges during 2026, with a 50 basis point premium introduced to the longer end of the yield curve in the first half of 2027 due to continued concerns surrounding debt sustainability and the pace of structural reforms.

First Capital expects inflation to average 6% in 2026, with recent monetary policy tightening by the Central Bank of Sri Lanka supporting inflation stability. However, the higher interest rate environment is expected to weigh on economic growth and credit expansion, creating potential room for a rate reduction during the first half of 2027.

Commenting on the outlook, Dimantha Mathew, Chief Research & Strategy Officer of First Capital Holdings PLC, said, “The recent tightening in monetary policy has helped stabilise inflation expectations, although it is expected to moderate economic momentum in the near term. We believe investors should remain positioned within shorter tenures, providing a dual opportunity with potential capital gains as yields are expected to normalise and move down towards our targeted bands, whilst attractive carry opportunities remain available for investors. While progress on reforms remains critical, improving macroeconomic stability could create favourable conditions for market recovery over the medium term.”

First Capital forecasts the Average Weighted Prime Lending Rate (AWPR) to remain between 10.0%–11.0% during the second half of 2026, before easing to 9.5%–10.5% in the first half of 2027, supported by moderating GDP and credit growth and stabilising liquidity conditions.

The Sri Lankan Rupee is expected to remain within a range of LKR 325–335 against the US Dollar during the second half of 2026, with a gradual depreciation to LKR 335–345 anticipated in the first half of 2027 as external pressures and foreign exchange dynamics evolve.

In equities, First Capital maintains its 2026 All Share Price Index (ASPI) base case fair value target of 20,500 and introduces a 2027 target of 24,500, supported by expectations of softer inflation, earnings recovery, improving liquidity and a gradual easing of monetary policy. Given the expected near-term sideways movement in the market, First Capital recommends a higher cash allocation of 50% to enable investors to capitalise on potential entry opportunities ahead of a broader recovery.

The First Capital Mid-Year Outlook 2026 reflects the institution’s continued commitment to providing research-driven market insights and supporting investors in making informed investment decisions amid Sri Lanka’s evolving economic landscape.

The CSE was trending down yesterday as external environmental issues, especially the US-Iran hostilities, continued to impact the global economy adversely.

The All Share Price Index went down by 170.60 points, while the S and P SL20 declined by 43.39 points. Turnover stood at Rs 2.63 billion with four crossings.

Turnover stood at Rs 2.63 billion with four crossings. Those crossings were: CT Holdings crossed 1.1 million shares to the tune of Rs 551 million; its shares traded at Rs 510, Cargills Ceylon 856,000 shares crossed for Rs 145 million; its shares sold at Rs 630, LMF 232 million shares crossed for Rs 232 million; its shares sold at Rs 84 and Dialog 457,000 shares crossed to the tune of Rs 20 million; its shares sold at Rs 43.

In the retail market companies that mainly contributed to the turnover were; JKH Rs 109 million (5.5 million shares traded), Haycarb Rs 93 million (535,000 shares traded), CCS Rs 60 million (447,000 shares traded), Bairaha Farm Rs 54 million (626,000 shares traded), Ambeon Capital Rs 48 million (1.6 million shares traded), LMF Rs 47 million (556,000 shares traded) and ACL Cables Rs 44 million (455,000 shares traded). During the day 56 million share volumes changed hands in 17347 transactions.

It is said that manufacturing sector counters, especially JKH, performed well. Further, beverage sector counters, especially Cargills and CCS performed significantly well.

Yesterday the rupee was quoted at Rs 336.20/30 to the US dollar in the spot market, from Rs 336.15/25 Friday, while bond yields edged up, dealers said.

The telegraphic transfer rate for the dollar was 331.80 buying, Rs 340.80 selling; the euro was 376.9467 buying, 390.8637 selling; and the pound was 445.4833 buying, 459.5289 selling.

By Hiran H. Senewiratne

HNB Life PLC manifested its commitment to innovation, operational excellence, and continuous improvement by securing three Gold Awards in the Quality Improvement Project Category at the National Convention on Quality and Productivity 2026, organized by the Sri Lanka Association for the Advancement of Quality and Productivity (SLAAQP).

The National Convention on Quality and Productivity serves as a premier platform for organizations across diverse industries to showcase successful Continuous Improvement (CI), Quality Improvement, Lean, Six Sigma, Kaizen, Productivity, and Operational Excellence initiatives. Participating organizations present projects that address business challenges, implement sustainable solutions, and deliver measurable outcomes that enhance organizational performance.

The three award-winning projects presented by HNB Life highlighted the Company’s ongoing efforts to enhance customer experience, improve operational efficiency, and empower its workforce through technology-driven innovation.

Commenting on the achievement, HNB Life’s Executive Director / Chief Executive Officer, Lasitha Wimalaratne, stated, “Winning three Gold Awards at the National Convention on Quality and Productivity is a testament to our culture of innovation and continuous improvement. At HNB Life, we constantly challenge ourselves to identify opportunities that create meaningful value for our customers, saleforce and employees. These awards reflect the dedication of our teams and I’d like to convey my heartfelt congratulations to all those involved.”

Also sharing his thoughts, EVP / Chief Transformation Officer, Dayan Ranasinghe, said, “Technology plays a pivotal role in transforming the way we serve our customers and empower our people. These award winning projects demonstrate how innovation, process optimization, and digital capabilities can work together to solve business challenges and create tangible impact. We are proud to see our teams being recognized at a national level for their efforts in driving meaningful change across the organization.”