Bourse remains positive, rupee gains

REUTERS: Shares hit their highest level in more than a year yesterday, while the rupee rose to a three-month peak, as former wartime defence chief Gotabaya Rajapaksa assumed his presidential duties.

Rajapaksa assumed office as the seventh president of the island nation yesterday after he won elections over the weekend.

The benchmark stock index, which rose 0.75% in the early trade, ended 0.22% firmer at 6,142.76, its highest close since 9 August 2018. The Bourse rose 1.53% last week, and it is up 1.49% for the year. 

“There were some sort of profit taking after a surge on Monday. But still we see foreigners are on the selling side in a lower volume. The index might move sideways until investors see how the new President is going to convert his manifesto into action,” said First Capital Holdings senior research analyst Atchuthan Srirangan,. 

The rupee ended 0.1% firmer at 179.25/50 per dollar, its highest since 21 August. It closed at 179.40/80 on Monday and is up 1.87% so far this year.

Foreign investors were net sellers of riskier assets for the ninth straight session on Tuesday.

They sold a net Rs. 255.8 million ($ 1.43 million) worth of shares yesterday, extending the net foreign outflow from the equities market to Rs. 8.3 billion for the year, according to index data.

Equity market turnover was Rs. 1.4 billion, well above this year’s daily average of about Rs. 699.6 million. Last year’s daily average was Rs. 834 million.

Meanwhile, foreign investors bought government securities on a net basis for the fourth time in six weeks, buying a net Rs. 2.2 billion worth of government securities in the week ended 13 November.

Total foreign outflows from government securities through 13 November stood at Rs. 48 billion, Central Bank data revealed.

Rajapaksa made national security his top priority after being sworn in on Monday. The majority of Sinhala Buddhists voted for him after he campaigned on promises to make the nation safer in the aftermath of the Easter bombings earlier this year.

The election outcome was positive for Sri Lanka and reduced political uncertainty, which should boost economic growth, Standard Chartered Bank said in a note. But the political establishment faced twin economic challenges of boosting growth and improving debt sustainability, it added.