Stock market falls for 3rd session

Reuters: Shares hit a one-week closing low on Monday, as investors sold shares of blue chip firms such as Ceylon Tobacco Company Plc and John Keells Holdings Plc amid concerns over rising market interest rates.

The Colombo stock index fell 0.33% to 6,139.51, slipping for a third straight session to its lowest close since 13 February.

“Blue-chips brought the market down. 

The profit-taking is still continuing and investors are more on a wait and see approach,” said Dimantha Mathew, head of research at First Capital Equities Ltd.

“The buying interest is there, but at a lower level. So investors are waiting to buy at cheaper rates.”

Shares of Ceylon Tobacco Company Plc fell 1.83%, while conglomerate John Keells Holdings Plc dropped 1.22%.

Turnover stood at Rs. 728.9 million ($ 4.83 million), more than this year’s daily average of Rs. 625.5 million.

Foreign investors offloaded a net Rs. 34.88 million worth of equities on Monday, extending the year-to-date net foreign outflow to Rs. 272.7 million worth of shares.

The market will remain slow for the next few days and many investors will wait for directions from a sovereign bond issue, Mathew said.

The Cabinet last week approved a $ 1.5 billion sovereign bond issue to repay loans and manage interest payments. Yields on treasury bills are hovering at a more than four-year high.

Rupee falls on importer dollar demand, bond outflow

Reuters: The rupee ended weaker on Monday on dollar demand from importers and foreign banks as foreign investors sold government securities amid concerns of further depreciation in the rupee, dealers said.

Rupee forwards were active, with one-month forwards ending at 152.95/15 per dollar, weaker from Friday’s close of 152.70/80.

However, two-week forwards ended marginally stronger at 151.75/75 per dollar due to exporter dollar sales later in the day. It ended at 151.80/152.00 per dollar on Friday.

“There is depreciation pressure (on the rupee) as there is steady importer (dollar) demand and some bond outflows, but we can’t see Central Bank intervention these days unlike last month,” said a currency dealer, requesting not to be named.

Central Bank officials were not available for comment. Sri Lanka could face balance-of-payments pressure due to foreign outflows from government securities, a Government document showed on Thursday, even as the island-nation is in the process of raising up to $ 2.5 billion from foreign borrowing. Foreign investors have net sold Rs. 49.1 billion ($ 325.70 million) worth of government securities in the seven weeks to 15 February, according to the latest Central Bank data.

Finance Minister Ravi Karunanayake said on 14 February that protecting a fragile rupee was more important than controlling interest rates as the local currency tended not to rebound after depreciating. Central Bank Governor Indrajit Coomaraswamy said early this month that the bank was not planning to abruptly stop supporting the rupee.

The rupee has weakened 0.8% so far this year, under pressure from rising imports and net selling of government securities by foreign investors. It fell 3.9% last year, following a 10% drop in 2015.