Stocks inch higher in thin trade; rupee weaker

Thursday, 23 May 2019 02:35 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lankan shares closed slightly higher yesterday, extending gains into a fourth session, but trading volume slumped to a near three-week low.

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.

Sri Lanka’s economy should still grow 3.5% this year and there has not been a revision yet, the IMF added last Thursday. The benchmark stock index ended 0.08% firmer yesterday at 5,295.68. It fell 1.28% last week.

Turnover was Rs. 127.4 million ($ 721,404), the lowest since 3 May and well below this year’s daily average of around Rs. 557.8 million. Last year’s daily average was Rs. 834 million. Foreign investors sold a net Rs. 30 million worth of shares yesterday, extending the year-to-date net foreign outflow to Rs. 5.8 billion worth of equities.

The rupee ended 0.23% weaker at 176.65/80 per dollar, compared with Tuesday’s close of 176.25/40, market sources said.

Analysts expect the currency to weaken as money flows out of stocks and government securities. The rupee gained 0.1% last week and is up 3.4% 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.