Colombo (Reuters): Sri Lanka’s share index fell for the third straight session on Tuesday to a more than 6-year closing low in light trading volume with foreign investors on the selling side, as the market awaits direction from the third and final vote on the 2019 Budget, market sources said.
Parliament last week passed the second reading of the 2019 Budget, which raises spending while setting an ambitious goal to reduce a large fiscal deficit. The final vote is scheduled for 5 April.
The stability of Prime Minister Ranil Wickremesinghe’s Government has been questioned by the Opposition since he was reinstated after a 51-day political crisis.
The Colombo Stock Exchange index fell 0.42% to 5,591.67, hovering near its lowest close since 26 December 2012.
The benchmark stock index fell 1.85% last week, recording its sixth straight weekly drop. It has declined 7.6% this year. Turnover was Rs. 291.3 million ($1.63 million), well below last year’s daily average of Rs. 834 million.
Foreign investors sold a net Rs. 182.6 million worth of shares, extending the year-to-date net foreign outflow of Rs. 6.15 billion worth of equities.
The rupee ended weaker at 178.40/50 to the dollar on demand for dollars from some foreign banks, compared with Monday’s close of 178.25/40.
The rupee has climbed 2.35% this year as exporters converted dollars and foreign investors purchased government securities amid stabilising investor confidence after the country repaid a $1 billion sovereign bond in mid-January.
Worries over heavy debt repayment after the 51-day political crisis that resulted in a series of credit-rating downgrades, denting investor sentiment as the country struggled to repay its foreign loans.
The rupee dropped 16% in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows.
Foreign investors bought a net Rs. 1.16 billion worth of government securities in the week that ended on 13 March, the second net inflow in four weeks, but they have sold a net Rs. 1.7 billion this year, the latest Central Bank data showed.