Stock market hits near 10-month closing low; foreign selling boosts turnover

Reuters: Stocks fell for a third straight session on Wednesday to close at their lowest in nearly 10 months, dragged down by beverages and banking shares, as concerns over rising interest rates and ongoing political instability weighed on sentiment.

Selling by foreign investors in Nestle Lanka boosted turnover, traders said.

The Colombo stock index ended 0.12% lower at 6,127.08, its lowest close since 4 April.

“Market is not moving up due to lack of confidence among the investors with rising interest rates,” said Atchuthan Srirangan, a senior research analyst with First Capital Equities Ltd.

“Investors might stay away for a while till they see positive news which can move the market up.”

Yields on treasury bills rose 2-5 basis points at a weekly auction on Wednesday to a near five-month high after the Central Bank governor signalled reduced intervention to defend the rupee.

Rising market interest rates, which move in tandem with t-bill yields, have been a cause for concern, brokers said.

Foreign investors net sold Rs. 385 million ($ 2.56 million) worth of equities on Wednesday, extending the year to date net foreign outflow to Rs. 1.75 billion worth shares.

Nestle Lanka, which accounted for around 62% of the day’s turnover of Rs. 690 million, fell 2.5%.

Market heavyweight John Keells Holdings slipped 0.6%.

Investors are also concerned about possible political uncertainty as the main coalition partners in the Government are contesting local polls separately, analysts said.