Bourse falls for 8th straight session; rising rates weigh
Thursday, 12 March 2015 01:39
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Reuters: Stocks closed at a near five-week low on Wednesday, falling for an eighth consecutive session, as investor concerns over rising interest rates and political uncertainty weighed on sentiment.
The main stock index lost 0.3%, or 19.86 points, to 7,110.19, its lowest close since 5 February, extending the fall to 2.83% in the last eight sessions.
“Interest rates are on the rise and we don’t know if it will rise further,” a stockbroker said on condition of anonymity. “So, investors are waiting for some direction on interest rates.”
“On the political front, it is unclear if there would be political stability after the parliamentary election and the market is concerned about that as well,” the stockbroker said.
Foreign investors were net buyers of Rs. 97.9 million worth of shares, extending the year-to-date foreign inflow to Rs. 2.58 billion.
Yields on t-bills rose between 21 basis points and 38 basis points at a weekly auction on Wednesday with the 91-day t-bill yield rising to a 14-month high of 7.10%.
The Central Bank has raised more than Rs. 105.3 billion ($ 792.33 million) this week alone through the sale of development bonds and government securities. It also plans to raise a further Rs. 20 billion ($ 150.49 million) via t-bonds on Thursday.
The heavy borrowing by the government has resulted in a spike in market interest rates.
Political uncertainty has also weighed on sentiment with elections to Sri Lanka’s 225-member parliament expected to be announced after 23 April. It is unclear whether the ruling coalition led by President Maithripala Sirisena would contest unitedly or go to the polls separately.
Political analysts expect a hung parliament if Sirisena’s coalition members contest separately.
Shares in Ceylon Tobacco Company Plc fell 0.97% and top fixed-line phone operator Sri Lanka Telecom lost 1.5%.
Turnover was Rs. 946.2 million, well below this year’s daily average of Rs. 1.37 billion.
