Bourse at 1-week high on lower rates, Keells up on foreign buying

Thursday, 26 June 2014 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Stocks rose for the second straight session on Wednesday to hit one-week highs, as lower interest rate helped boost local investor sentiment, while foreign investors bought market heavyweight John Keells Holdings Plc. The main stock index rose 0.17%, or 10.68 points, to close at 6,321.55, its highest since 17 June. Analysts said the market would move sideways in the short term with lower risk due to lower interest rates. Yields in Treasury bills edged down further on Wednesday at a weekly auction. Market heavyweight John Keells Holdings, which ended 0.95% firmer, accounted for 34.8% of the day’s turnover. The Bourse saw a net foreign inflow of Rs. 138.7 million ($ 1.07 million) worth of stocks on Wednesday, extending the net foreign inflows so far this year to Rs. 5.97 billion. Turnover was Rs. 705.3 million, less than this year’s daily average of Rs. 997.1 million. Analysts said investors were waiting to see the impact of the recent ethnic violence and possible implications after a Government Spokesman said Sri Lanka bought Iran crude via third parties. Stockbrokers said investors perceive the violence in the previous weekend that killed at least three people could hit the market and the tourism sector. The Government Spokesman said on Thursday the country has been buying Iranian crude from various countries via third parties, and avoiding Western sanctions with the understanding of the United States. The United States denied the claim. The market has been on a rising trend since late February due to continued foreign buying and lower interest rates.

Rupee tad weaker on importer dollar demand; Iran crude concerns hurt

Reuters: The rupee closed at a three-week low on Wednesday due to importer dollar demand, while dealers expect the rupee to face downward pressure if the United States investigates claims regarding import of Iranian crude via third parties. The rupee ended weaker at 130.34/38 per dollar, its lowest since 3 June, from Tuesday’s close of 130.32/35. “Importer dollar demand has picked up,” a currency dealer said asking not to be named. Dealers said the currency would trade in a range of 130.40 to 130.50 due to expected importer dollar demand, but it may gain due to inflows. Currency dealers said it was too early to speculate about the implications of the country breaching US sanctions. The Government Spokesman said on Thursday the country had been buying Iranian crude from various countries via third parties. The Foreign Ministry has rejected the Spokesman’s claim. The US State Department has said in the event of Sri Lanka breaching the sanctions, the United States would have to consider a response consistent with its legal obligations and “any violations would immediately make the company or institution vulnerable to sanctions”. “But nothing has happened of that nature so far and it has been a relief for the market,” said a currency dealer with a Colombo-based foreign bank. Sri Lanka’s oil import bill could rise if it has to buy more refined oil, dealers said. Dealers expect the currency to be stable if there is no pressure from the oil import bills due to rising exports and a fall in imports and private-sector credit growth. The rupee has been on a rising trend since late February due to strong inflows from remittances in the absence of higher imports and private sector credit demand for the currency, dealers said. The Central Bank has absorbed around $550 million from the domestic foreign exchange market this year through 17 June to prevent sharp volatility and appreciation.