Bourse hits 5-month closing low, foreign investors cap falls

Reuters: Sri Lankan shares ended weaker yesterday to hit their lowest close in more than five months as investors sold telecom and banking shares, while foreign buying curbed further decline.

Foreign investors bought net Rs. 318.2 million ($2.01 million) worth of equities yesterday, but the market has witnessed a year-to-date net foreign outflow to Rs. 824 million worth of shares.

The Colombo stock index ended 0.1% weaker at 6,394.93, its fifth drop in six sessions. It fell 1% last week.

“The market is completely dead and some block deals pushed the turnover levels,” said First Capital Holdings Head of Research Dimantha Mathew. “Investors are adopting the wait-and-see approach for some positive news, especially on the economic front.”

Turnover was Rs. 771.8 million, less than this year’s daily average of Rs. 994.2 million.

A weaker rupee, political uncertainty and the recent fuel price hike also weighed on sentiment, as local investors mostly remained on the sidelines as they gauged the impact of the floods that killed 24 people in the nation over the past two weeks, brokers said. Shares in Dialog Axiata PLC ended 2.1% lower, while Ceylinco Insurance PLC closed down 4.3% and Hemas Holdings PLC ended 2.4% weaker.

Foreign investors, who mostly sold shares of John Keells last week, bought the market heavyweight after the lower prices made it more attractive, stockbrokers said. Shares of John Keells ended steady yesterday.

Reports that MSCI Frontier Markets 100 Index, which captures large- and mid-cap representation across 29 frontier markets, will remove Keells from its index triggered foreign selling. The rupee hit a fresh low of 158.80 per dollar on Friday (1 June) owing to dollar demand from foreign banks and importers, but ended steady on late inflows from remittances.

Analysts said market sentiment was dented by concerns over political instability following President Maithripala Sirisena’s decision to suspend Parliament last month after 16 legislators from his ruling coalition defected.

Last month, Sirisena urged his own coalition Government and the Opposition to end a power struggle to achieve ambitious goals including anti-corruption measures.