Shares at 2-week low on profit-taking; rupee ends weaker

Reuters: Shares ended weaker yesterday, falling for a fourth straight session to a two-week low, as investors booked profits ahead of the presidential vote on 16 November.

The country’s main Tamil party yesterday announced their support for Sajith Premadasa, the Housing Minister and one of the two presidential frontrunners, giving him an edge over his rival Gotabaya Rajapaksa. 

There are growing concerns over giveaways promised by the top two presidential candidates after officials and a credit rating agency warned that their pledges could push the country deeper into debt. 

The International Monetary Fund (IMF) approved the release of sixth tranche of a $ 1.5 billion loan program for Sri Lanka, but asked the authorities to show fiscal discipline. 

Sajith Premadasa has promised free housing for all, free school uniforms and meals for students, and free fertiliser for farmers among other things. Rajapaksa has vowed to cut a 15% value added tax by nearly half and abolish some taxes as a way to reignite consumption. 

The benchmark stock index ended 0.41% weaker at 5,932.07. Last week, the index rose 1.6% in its fourth straight weekly gain, but is down 1.99% this year. 

Political analysts say the leading candidates are locked in a tough fight, although Premadasa has been gaining at the grassroots level due to his poverty elimination policies and support from minorities. 

Diversified and banking stocks were among the top losers, with Hemas Holdings Plc falling 3.6%, Vallibel One Plc 4.6%, Hatton National Bank Plc 1.1%, conglomerate John Keells Holdings Plc 0.39% and Sampath Bank Plc 1.6%. 

The rupee ended 0.11% weaker at 180.70/181.00 per dollar, compared with Wednesday’s close of 180.50/80. The currency is up 1.1% so far this year. 

Foreign investors were net sellers of riskier assets for 11 out of 12 sessions yesterday. They sold a net Rs. 13.3 million ($ 73,602.66) worth of shares yesterday, extending the net foreign outflow so far this year to Rs. 5.78 billion worth of equities, according to index data. 

Equity market turnover was Rs. 599.7 million, less than this year’s daily average of about Rs. 680.5 million. Last year’s daily average was Rs. 834 million. 

Meanwhile, foreign investors bought government securities on a net basis for a second time in four weeks, buying a net Rs. 1.55 billion worth of government securities in the week ended 30 October. 

Total foreign outflows from government securities through 30 October stood at Rs. 52.08 billion, Central Bank data showed. 

The Central Bank left its key rates unchanged on 11 October after loosening policy this year, although growth is likely to remain subdued as the economy faces rising global risks.