Stock market ends lower

Reuters: Shares edged down for a second straight session on Wednesday, hovering near a 22-month low, as investors preferred low-risk assets in line with global peers and as an interest rate hike last week continued to dampen sentiment.

Shares fell in Europe and Asia on Wednesday as oil prices dipped after Saudi Arabia effectively ruled out output cuts by major producers, lifting investor appetite for safe-haven assets such as the Japanese yen and gold.

Yields on 182-day and 364-day t bills rose 50-55 basis points at a weekly auction on Wednesday to a more-than two-year high, signalling a further rise in market interest rates.

The benchmark share index closed 0.18% weaker at 6,217.64, hovering near its lowest close since April 2014 which it hit on Thursday. It has fallen around 10% this year through Wednesday, amid a rise in market interest rates.

“Market is down mainly because of the negative effects of the rate hike,” said Yohan Samarakkody, Head of Research, SC Securities Ltd. “It’s not factored in immediately with low liquidity, but it will be factored in slowly.”

The Central Bank raised key policy interest rates by 50 basis points on Friday from a record low, to prevent demand-driven inflationary pressure.

Turnover was Rs. 384.3 million ($2.68 million), well below this year’s daily average of Rs. 718.3 million.

Foreign investors sold a net Rs. 4.3 million worth of shares on Wednesday, extending the net foreign outflow to Rs. 1.47 billion worth equities so far this year.

Shares in Commercial Leasing and Finance Plc fell 7.89%, while Sri Lanka Telecom Plc dropped 2.43%.