Stocks at 6-week closing low on profit taking; earnings awaited

Wednesday, 22 October 2014 00:01 - - {{hitsCtrl.values.hits}}

Reuters: Stocks fell for the fourth straight session on Tuesday to hit a six-week closing low, a day after the Government announced it would hold a presidential election in January, nearly two years ahead of schedule. Most local investors offloaded positions to cut losses, dealers said. President Mahinda Rajapaksa is expected to run for a third six-year term. The poll schedule announcement came amid signs Rajapaksa’s popularity is fading after accusations that his party is abusing power. Analysts said investors were waiting for cues from the 2015 Budget scheduled for Friday and a raft of September quarterly earnings expected next week. Sri Lanka’s main stock index fell 0.72%, or 52.29 points, to 7,161.16, its lowest since 9 September. “Some people are taking profits and there is no strong local buying. Some local retail investors also sold their shares to cut losses as the index has been on a downward trend,” said Danushka Samarasinghe, COO at Softlogic Stockbrokers. Stockbrokers said trading in local shares may be volatile due to the revised poll schedule and a possible bottoming out of interest rates. The day’s turnover was Rs. 897.4 million ($ 6.87 million), less than this year’s daily average of Rs. 1.36 billion. Foreign investors bought a net Rs. 165.1 million worth of shares on Tuesday, extending the year-to-date net foreign inflow to Rs. 10.3 billion, exchange data showed. The country’s biggest listed lender Commercial Bank of Ceylon Plc, which led the overall fall of the index, lost 1.43% at Rs. 158.60. Shares in conglomerate John Keells Holdings fell 0.20% to Rs. 246.50, while Dialog Axiata Plc ended 0.83% down at Rs. 12. Both the currency and stock markets will be closed for a holiday on Wednesday. Trading will resume on Thursday.

Rupee forwards weaker on importer dollar demand; CB curbs fall

Reuters: The rupee forwards ended slightly weaker on Tuesday due to dollar demand from importers, but dealers said the Central Bank’s intervention via moral suasion prevented a sharp fall in the local currency. Exporters were reluctant to sell dollars ahead of the Budget announcement for 2015 on Friday, dealers said. The three-day forwards, trading in the absence of spot, were quoted at 130.90/131.00 per dollar, down from Monday’s closing level of 130.85/95. “Exporters were very cautious ahead of the budget and there was pressure from importers,” a currency dealer said on condition of anonymity. Dealers also said the Central Bank persuaded banks not to trade the spot-next below 130.90 after capping it at 130.85 in early trade. Central Bank officials were not immediately available for comment. The spot currency was neither traded nor quoted for a second straight day. It ended at 130.60/80 on Friday. A top Central Bank official said on Monday the monetary authority would intervene to prevent short-term volatility in the rupee. “Even moral suasion or our intervention is to prevent short-term volatility,” said Nandalal Weerasinghe, a Deputy Governor at the Central Bank, at a public forum late on Monday. “What we have been doing over the last 12 months is to prevent a sharp appreciation of the currency by intervening and bringing in our resources just to maintain some stability.” Weerasinghe also said the Central Bank expects short-term interest rates to stabilise around 6%, though lower inflation has given it room for further monetary policy easing. The Central Bank held key policy rates steady on Friday, a day after Governor Ajith Nirvard Cabraal said a rise in the 364-day T-bill yield was a signal of where the authorities want rates to be amid pressure on the rupee from foreign outflows.