Bourse falls to 3 and half month closing low, blue chips drag

Wednesday, 9 August 2017 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Shares fell for an eighth straight session on Tuesday, posting their lowest close in nearly 3-1/2 months, with blue chips such as John Keells Holdings Plc leading the decline while selling by foreign investors also weighed on the market.

The Colombo stock index fell 0.66%, or 43.30 points, to 6,524.13, its lowest close since 26 April. It fell 1.5% last week in its third straight weekly drop.

“The market continued to come down on blue chips in low turnover,” said Dimantha Mathew, head of research at First Capital Holdings.

“We find it mainly due to the negative sentiment after the earnings with the economic slowdown.”

Foreign investors, who have been net buyers of Rs. 26.5 billion of equities so far this year, net sold shares worth Rs. 29.1 million (about $ 189,886) on Tuesday.

Turnover stood at Rs. 350.4 million, less than half of this year’s daily average of around Rs. 893.3 million.

Shares of conglomerate John Keells dropped 2.8%, Nestle Lanka Plc dropped 1.6%, Caltex Lubricant Lanka Plc ended 3.6% weaker and Dialog Axiata Plc declined 0.9%.

Analysts, however, expect equities to gain due to a fall in the yields of government bonds.

Sri Lanka’s Central Bank held policy rates steady on Thursday, and said tightening measures taken in the past are helping cool inflation and credit growth. Short-term treasury-bond yields fell between 41 basis points (bps) and 55 bps at a weekly auction last week, while the yields on a 59-month bond dropped by 99 bps, while that on a 118-month bond fell by 78 bps. Sri Lanka’s stock and foreign exchange markets were closed on Monday for a Buddhist religious holiday.

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