Shares edge up from 1-week low; rate concerns weigh

Reuters: Shares closed slightly firmer on Thursday, snapping a three-session losing streak, amid concerns a rise in interest rates could turn investors away from stocks and into fixed income assets, brokers said.

The main stock index ended 0.07%, or 5.11 points firmer, at 7,245.50, edging up from its lowest close since 26 August hit on Wednesday.

“Local institutions and investors are on silent mode. People are looking for direction and global stories are also not that great,” said a stockbroker asking not to be named.

Results of the weekly T-bill auction on Wednesday showed yields of short-term Government securities rose between 20 and 26 basis points, with benchmark 91-day T-bill yields hitting a more-than five-month high of 6.79%.

The country’s Central Bank kept key interest rates steady at record lows on Monday, with inflation seen lower in the next few months. 

Foreign investors sold a net Rs. 196.1 million ($1.46 million) worth of shares on Thursday, extending the year-to-date net foreign outflow to Rs. 3.68 billion.

Turnover stood at Rs. 566.7 million, around half of this year’s daily average of Rs. 1.15 billion.

Shares in Ceylon Tobacco Company Plc CTC.CM rose 0.98%, while Aitken Spence Plc gained 1.56%.