Interest rates, growth woes drag down shares

Tuesday, 13 March 2012 01:19 - - {{hitsCtrl.values.hits}}

Reuters: The stock market slumped further on Monday as fears of slowing economic growth and higher interest rates prevailed ahead of this week’s monetary policy announcement.

The main share index fell 0.58 per cent or 32.81 points to 5,456.27, lowest since 19 February.

“The longer it goes like this with low volume and little activities, the investors who stuck will start to sell off. That’s the worry we have in the retail side and we could see the market drift down below 5,000,” Stefan Juriansz, Technical Analyst at Bartleet Religare Securities in Colombo, said.

The Central Bank on Friday said it will lower its 2012 growth forecast of eight per cent to a figure no lower than seven per cent, and most likely will release the revised forecast with Wednesday’s monetary policy announcement.

The day’s turnover was Rs. 378.3 million ($ 3.12 million) well below last year’s daily average of Rs. 2.3 billion. Volume was 16.3 million. Last year’s daily average was a record 102.7 million.

Foreign investors bought shares worth Rs. 121.9 million, extending the offshore net foreign inflow to Rs. 2.89 billion so far this year, after a net outflow of 19.1 billion last year.

The Colombo Bourse is one of the worst performers this year among Asian markets, with a 10.7 per cent loss while the majority have been in positive territory.

Heavy importer dollar demand drove the rupee down to 122.00/20 a dollar from Friday’s close of 121.50/70.

The rupee has fallen 6.4 per cent since 9 February, when the Central Bank stopped defending it. A Reuters monthly forex poll has forecast the rupee to fall as far as 128.50 by the end of August.

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event including Valentine ’s Day. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Flower Bouquets, Clothing, Watches, Lingerie, Gift Sets and Jewellery. Also if you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.