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Reuters: Stocks hit a more than one-week closing low on Thursday, falling for a fourth straight session, as uncertainty over foreign investments and rising yields on short-term government securities hurt investor sentiment.
Block deals however boosted turnover to a three-week high.
The Colombo stock index ended down 0.33% at 6,164.90, its lowest close since 10 January.
The index hit a two-week high on Friday, after the European Commission proposed increased market access for Sri Lanka as a reform incentive.
“The market is desperate for positive news,” said Hussain Gani, deputy CEO at Softlogic Stockbrokers.
Rising market interest rates, which move in tandem with t-bill yields, are also cause for concern, other stockbrokers said.
Yields on treasury bills rose 1-16 basis points at a weekly auction on Wednesday to a four-month high after the central bank governor signalled reduced intervention to defend the rupee currency.
Investors are also concerned over possible political uncertainty as the main coalition partners in Government are contesting local polls separately, analysts said. Delay in foreign investments after a debt and balance of payments crisis last year is also weighing on sentiment, they said.
Turnover stood at Rs. 1.55 billion ($ 10.35 million) on Thursday, its highest since 29 December. Foreign investors sold a net Rs. 156.3 million worth of equities on Thursday, extending the year-to-date net foreign outflow to Rs. 1.79 billion worth of shares. Market heavyweight John Keells Holdings fell 0.64%, while top fixed line phone operator Sri Lanka Telecom lost 1.4%.
Reuters: The rupee ended weaker on Thursday for a second day due to dollar demand from importers as the market braced for further declines in the local currency in the absence of intervention from the country’s Central Bank, dealers said.
The rupee has been under pressure due to rising imports and net selling of government securities by foreign investors, and a Central Bank decision to adjust the spot rupee reference rate to a record low of 150.15 rupees to the dollar.
Rupee forwards were active, with two-week forwards ending at 151.00/10 per dollar, weaker from Wednesday’s close of 150.75/80.
“It looks like depreciation is going to continue,” a currency dealer said asking not to be named. “We did not see any intervention from the Central Bank.”
The spot rupee was quoted around the Central Bank’s reference level of 150.15, dealers said. It is hovering at a record low level.
Officials from the Central Bank were not immediately available for comment.
Sri Lanka’s Central Bank sold $ 233 million worth development bonds on Thursday, and investors expect that would ease some pressure on the rupee.
The rupee has also been under pressure due to selling of government bonds by foreign investors.
They have net sold Rs. 16.1 billion ($ 107.3 million) worth of government securities in the week up to 11 January, according to the latest Central Bank data.
