Stock market dip persists

Reuters: Shares fell for a fourth straight session on Thursday to a near 23-month low, led by conglomerate John Keells Holdings as concerns over rising interest rates and the country’s rating downgrade dented sentiment, traders said.

Sri Lanka’s benchmark share index closed 0.29% lower, or 17.50 points, at 6,060.91, the lowest close since 7 April 2014.

“There is no sign of resistance at these levels. We expect some kind of resistance at 5,800 points. Some block trades dominated the market and the balance is retail trading. 

Buying side is weak,” said Prashan Fernando, CEO at Acuity Stockbrokers.

“The global economic situation has also hit sentiment. Things might change when we get the IMF loan. But the concern is the conditions the IMF may ask Sri Lanka to comply with,” Fernando said.

On Wednesday, Fitch downgraded the ratings of some listed blue chip firms and strategic state firms after it downgraded Sri Lanka’s sovereign rating to B-plus from BB-minus on Monday, citing increased refinancing risks, significant debt maturities, and weaker public finances.

The index remained in oversold territory for the eight straight session, with the 14-day relative strength index at 18.840 on Thursday, compared with Wednesday’s 19.741, Thomson Reuters data showed.

A level between 70 and 30 indicates the market is neutral.

Yields on treasury bills rose between 42 and 54 basis points (bps) at a weekly auction on Wednesday to a more than two-year high, extending the rise between 54 and 105 bps since the Central Bank raised the policy rates by 50 bps on 19 February.

Turnover was at Rs. 551.1 million ($3.8 million), less than this year’s daily average of Rs. 717.3 million.

Foreign investors were net buyers for the fifth straight session, purchasing Rs. 136.4 million worth of shares.

Shares in Nestle Lanka Plc fell 0.37% while conglomerate John Keells fell 0.90% and John Keells Hostels Plc slipped 5.38%.