Bourse near two-week low; rupee flat

• Retail selling push stocks near two-week lows
• Foreign investors net sellers of Rs. 339.9 m
• Rupee flat despite heavy importer dollar demand

Reuters: Sri Lanka’s stock market fell near a two-week low on Tuesday on high turnover and volume as retail investors sold amid a credit shortage while institutional investors stayed cautious in line with global market fears.

The island nation’s main share index closed 0.54 per cent or 37.58 points weaker at 6,930.04, the lowest since Aug. 30. It is the second-best performer in Asia with a return of 4.43 per cent on the year, after Indonesia.

Globally, stocks and the euro fell on Tuesday after a report cast doubt on the idea China would provide financial support to Italy, leaving investors focussed on growing risks to European banks and the euro.

In Colombo, telecommunication and beverage shares pulled the market down with losers outperforming gainers by 167 to 53, Thomson Reuters data showed.

“The market recorded moderate declines on retail selling with activity levels centred around second-tier stocks,” John Keells Stockbrokers said in a note to investors.

The day’s turnover was Rs. 3.1 billion ($ 28.2 million), more than last year’s average of 2.4 billion and this year’s 2.8 billion.

Shares of Lanka Milk Foods, which contributed 20 per cent of the day’s turnover with over 5.5 million shares changing hands on institutional investor interest, closed 0.2 per cent firmer at 110.40 rupees a share.

The bourse witnessed a foreign outflow of Rs. 339.9 million on Tuesday, and thus far in 2011, offshore investors have sold 15.51 billion after a record 26.4 billion in 2010.

After the end of a long civil war, Sri Lanka’s bourse turned into Asia’s best performer in 2009 and 2010, gaining 124 per cent and 96 per cent respectively, but has touched negative on-the-year territory this year.

Tuesday’s total volume was 297.3 million, against a five-day average of 317.8 million. The 30-day and 90-day average trading volumes were 156.4 million and 139.4 million. Last year’s daily average was 67.9 million.

The rupee closed flat at 110.09/110.10 a dollar from Monday’s close despite heavy importer dollar demand a State bank, through which the Central Bank directs the market, sold dollars at 110.10, a dealer said.