Stock market ends at near one-month closing high

Reuters: Stocks on Thursday posted a third straight session of gains to end at a near one-month closing high, led by gains in financial stocks, a day after yields in T-bills dropped.

The benchmark index of the Colombo Stock Exchange ended up 0.25%, or 15.98 points, at 6,528.30, its highest close since 2 September.

The Central Bank’s widely expected decision on Wednesday to hold the rates steady suggested that policy makers were keen to support a slowing economy even as they kept a tight leash on rampant credit growth.

Treasury bill yields fell between 16 basis points and 33 basis points after the rate decision.

Analysts said they expected the stock index to rise this week due to the fall in the return on fixed income assets.

The bank has tightened policy three times since December.

After four consecutive weekly losses, the index had posted a weekly gain of 0.1% last week.

“The market is poised to move up. We see retail buying coming into the market,” said Reshan Kurukulasuriya, chief operating officer, Richard Pieris Securities Ltd.

“All economic indicators are also helping the market to move up. Market will move further up after the budget,” he said referring to 2017 budget, scheduled to be presented in the parliament on 10 November.

Foreign investors bought a net Rs. 6.9 million worth of shares on Thursday. But they have been net sellers of Rs. 2.95 billion worth of equities so far this year.

Turnover stood at Rs. 479.4 million ($ 3.27 million), less than this year’s daily average of Rs. 753.2 million.

Shares in Lanka ORIX Leasing Company Plc climbed 2.5% while the biggest-listed lender Commercial Bank of Ceylon Plc edged up 0.7%.

Rupee edges down on importer dollar demand

Reuters: The rupee ended weaker on Thursday, posting its fourth straight session of losses, as dollar demand from importers exceeded mild greenback sales by exporters and low inward remittances, dealers said.

The spot rupee ended at 146.90/147.00 per dollar, compared with Wednesday’s close of 146.62/70. It has fallen 0.7% so far this week.

“Some exporters are expected to come in if the spot rupee crosses 147 levels,” a currency dealer said asking not to be named.

The Central Bank’s decision on Wednesday to hold key monetary policy rates steady suggested that policymakers were keen to support a slowing economy even as they kept a tight leash on rampant credit growth, analysts said.

After the rate decision, treasury bill yields dipped between 16 and 33 basis points.

Private sector credit growth was at 28.5% year-on-year in July, its highest since August 2012, but Central Bank chief Indrajit Coomaraswamy said on Wednesday that the Central Bank expected the credit expansion rate to slow to 20% by the year-end.

The Central Bank is under pressure from the International Monetary Fund (IMF) to continue rebuilding international reserves and maintain exchange rate flexibility to develop the foreign exchange market further.