Bourse falls on weaker rupee; policy announcement awaited

REUTERS: Sri Lankan shares fell on Thursday in light trade, as a weakening rupee and high interest rates prompted investors to cut holdings in telecom and financial stocks, brokers said.

Trading volume remained low as investors awaited cues from the policy of the new government.

The main stock index ended 0.32% or 23.31 points weaker at 7,159.94, hovering near its lowest close since 16 July hit on Tuesday.

Turnover stood at Rs. 588.9 million ($ 4.24 million), nearly half of this year’s daily average of Rs. 1.14 billion.

“Investors are awaiting clarity in government policy in the budget,” said a stockbroker asking not to be named. “The rupee depreciation and the rising interest rates also weighed on sentiment.”

On Tuesday, the bourse hit a near eight-week low as investors waited for economic policies from the newly formed government. A weaker rupee curbed investor risk appetite and rising market interest rates also hit sentiment.

The central bank rejected all the bids in a weekly t-bill auction on Wednesday, an indication that dealers are bidding at higher yields than the Central Bank’s expectations, traders said.

Results of the last week t-bill auction showed the yields gaining between 20 and 26 basis points, with the benchmark 91-day t-bill yields hitting a more-than five-month high of 6.79%.

Foreign investors sold a net Rs. 17.4 million worth shares on Thursday extending the year to date net foreign outflow to Rs. 3.21 billion worth of equities so far this year.

Shares in Dialog Axiata Plc fell 1.74% while Lion Brewery Ceylon Plc fell 2.97%, dragging down the overall index.

Shares in Lanka ORIX Leasing Co Plc fell 0.10% and Sri Lanka Telecom Plc fell 1.47%.