Stocks snap five days of gains in light trade; rupee steady

REUTERS: Shares snapped five straight sessions of gains on Friday in low trade amid worries over economic slowdown and lack of investor appetite for risky assets. 

Traders said the Easter Sunday bombings and aftermath violence weighed on investor sentiment. Most investors have shied away from the market since the 21 April bombings that killed more than 250 people. 

Sri Lanka is unlikely to hit its full-year economic growth target of 3-4% following the Easter Sunday bombings, junior finance minister Eran Wickremeratne told Reuters on Tuesday. A Reuters poll has predicted the growth to slump to its lowest in nearly two decades this year. 

The International Monetary Fund (IMF) on 14 May approved the disbursal of a $164 million tranche of a loan program, bringing the total disbursed to more than $1.16 billion. The benchmark stock index ended 0.2% weaker on Friday at 5,295.11. But it rose 0.67% for the week, recording its first weekly gain in three. The bourse has fallen 12.5% so far this year. 

Turnover was Rs. 283.6 million ($1.61 million), around half of this year’s daily average of around Rs. 549.8 million. Last year’s daily average was Rs. 834 million. Foreign investors sold a net Rs. 70.2 million worth of shares on Friday, extending the year-to-date net foreign outflow to Rs. 5.9 billion worth of equities. 

The rupee ended steady at 176.30/45 per dollar, market sources said. 

Analysts, however, expect the currency to weaken as money flows out of stocks and government securities. The rupee fell 0.23% during the week but is up 3.6% for the year. Exporters had converted dollars as investor confidence stabilised after a $1 billion sovereign bond was repaid in mid-January. 

The rupee dropped 16% in 2018 and was one of the worst-performing currencies in Asia. Foreign investors sold a net Rs. 433.2 million worth of government securities in the week ended 15 May, extending net foreign outflow to Rs. 21.2 billion so far this year, Central Bank data showed. 

Investor sentiment was damaged at the end of last year when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved Parliament. A court later ruled the move unconstitutional, but the political turmoil led to credit rating downgrades and an outflow of foreign funds.