Bourse dips as foreigners turn net sellers after 5 weeks

Wednesday, 10 December 2014 00:08 - - {{hitsCtrl.values.hits}}

Reuters: Stocks edged down on Tuesday in sluggish trade, with large-caps such as Ceylon Tobacco Co Plc leading the falls as investors remained cautious ahead of the presidential poll next month. The main stock index fell 0.32%, or 23.53 points, to close at 7,217.94. Foreign investors turned net sellers for the first time in five weeks on Tuesday, offloading shares worth a net Rs. 106.8 million, But they have net bought Rs. 21.81 billion worth of stock this year, exchange data showed. Turnover was Rs. 790.7 million ($6 million) on Tuesday, according to the data, a little more than half of this year’s daily average of Rs. 1.43 billion. “The market is volatile. With the recent crossovers, investors are waiting for direction,” said Reshan Kurukulasuriya, Chief Operating Officer of Richard Pieris Securities Ltd. “What we see is a small hiccup.” Analysts said many investors were staying away ahead of the elections and the festive season. Ceylon Tobacco ended 3.27% lower, while Shalimar Estate fell 15.15%. Analysts expect volatility to continue and the overall index to be flat until the elections on 8 January, with speculation over more defections and likely violence ahead of the polls also weighing on sentiment. Nine loyalists from President Mahinda Rajapaksa’s United People’s Freedom Alliance, including former health minister Maithripala Sirisena, have defected since Rajapaksa announced snap elections last week. Sirisena resigned to contest against Rajapaksa as the consensus candidate of a united opposition. Speculation over more defections also weighed on sentiment, analysts said. Nineteen candidates, including Rajapaksa and Sirisena, have submitted their nominations for the polls.

Rupee forwards end weaker on importer dollar demand

Reuters: Rupee forwards closed weaker on Tuesday as importer dollar demand outpaced greenback selling by exporters and inward remittances, dealers said. The spot currency and three-day forwards, or spot-next, were not traded after the Central Bank capped the currency at predetermined levels to prevent volatility, traders said. Central Bank officials did not offer comment on whether limits were placed on the rupee’s level. Dealers said actively traded four-day forwards, or spot-next-next, ended at 131.95/132.00 per dollar with compared with Monday’s close of 131.92/97. “Persistent importer dollar demand was there but nobody traded above 132.00, the level seen as the Central Bank’s desired level,” said a currency dealer. Overseas investors sold a net Rs. 1.55 billion worth of Government securities during the week ended 3 December, the first outflow in three weeks. They sold a net Rs. 40.2 billion ($306.64 million) worth in the 10 weeks through 3 December, data from the Central Bank showed.

Treasury bond yields dip marginally ahead of primary auction

By Wealth Trust Securities Activity in secondary bond markets picked up yesterday as the market witnessed some buying interest resulting in yields closing the day marginally lower than its previous day’s closing levels. The liquid maturity of 1 July 2022 decreased to an intraday low of 8.12% while the two 2018 maturities (i.e. 1 April 2018 and 15 August 2018) traded within the range of 7.12% to 7.15% and 7.20% to 7.25% respectively. However, selling interest at these levels curtailed any further downward movement as volumes traded remained moderate. Meanwhile in secondary bill markets, May and November 2015 maturities were quoted within the range of 5.75% to 5.80% and 5.95% to 6.00% respectively. This was ahead of today’s weekly Treasury bill auction, at where an total amount of Rs. 12 billion will be on offer consisting of Rs. 3 b on the 182 day and Rs. 9 b on the 364 day maturities respectively. At last week’s auction, the weighted average on the 364 day bill reflected a dip of one basis point to 5.99% while the 182 day bill weighted average remained unchanged at 5.84%. In money markets, the weighted averages on overnight call money and repo rates remained mostly unchanged at 5.95% and 5.48% respectively as no auctions under Central Bank’s Open Market Operations (OMO) were conducted yesterday. The surplus liquidity stood at Rs. 18.65 billion yesterday. Rupee appreciates marginally In the USD/LKR market, the rupee appreciated marginally on active spot next-next contracts to close the day at levels of Rs.131.90/95 in comparison with its previous day’s closing level of Rs.130.95/97. The total USD/LKR traded volume for 8 December was at $ 31.40 million. Some of the forward dollar rates that prevailed in the market were: one month – 132.55; three months – 133.45; and six months – 134.70.