Secondary market bond activity moderated ahead of FOMC decision

• Rupee appreciates marginally

By Wealth Trust Securities

Overall activity in secondary bond markets moderated yesterday due to a ‘wait and see’ policy adopted by most market participants ahead of the Federal Open Market Committee (FOMC) rate decision by the Federal Reserve due late evening yesterday. 

A limited amount of activity was witnessed on the liquid maturities of 01.05.20, 01.10.22, 01.09.23 and 01.09.28 within range of 9.55% to 9.58%, 10.00% to 10.02%, 9.98% to 10.00% and 10.87% to 10.90% respectively. 

In addition, buying interest on secondary market bills saw November 2015 bills change hands within the range of 6.65% to 6.70% and February 2016 within 6.95% to 7.05% respectively. In money markets, surplus liquidity dipped once again to record Rs.48.50 billion yesterday as overnight call money and repo rates remained mostly unchanged to average 6.35% and 6.45% respectively.

 

Rupee appreciates for first time following free float

 The rupee on spot contracts was seen appreciating for the first time following the free float on 4 September to close the day at Rs. 140.35/60 against its previous day’s closing levels of 140.80/00, subsequent to dipping to an all-time low of Rs. 140.99 yesterday. The total USD/LKR traded volume for 16 September 2015 was $ 43.00 million. Some of the forward USD/LKR rates that prevailed in the market were one month - 140.90/20; three months - 142.20/50 and six months - 143.75/00.

Stock market dips; end at lowest since mid-July

Reuters: Shares ended at their lowest in more than two months on Thursday, slipping for a third straight session, led by diversified shares as cautious investors awaited direction amid a weakening rupee and an upward trend in interest rates.

The main stock index ended down 0.33% at 7,113.51, its lowest close since 15 July.

Turnover stood at Rs. 658 million ($4.69 million), well below this year’s daily average of Rs. 1.12 billion. The turnover has been about half of this year’s daily average since 31 August, stock exchange data showed.

“Policy directive is not clear and the rupee depreciation is also affecting the manufacturing sector,” said Dimantha Mathew, a Research Manager at First Capital Equities Ltd.

Analysts said investors were waiting to see how the Government would bridge the budget deficit and where the revenue would come from, in its November budget. A weak rupee curbed investor risk appetite and rising market interest rates also hit sentiment, with T-bill yields at their highest level in more than five months at the last auction. The rupee ended a tad firmer on Thursday, after hitting a record low for a fourth session in a row on Wednesday.

Foreign investors were net buyers of Rs. 29.6 million worth of shares on Thursday, but they have been net sellers of Rs. 2.94 billion worth of equities so far this year. Shares in conglomerate John Keells Holdings Plc fell 0.97%, and brokers attributed the fall to new shares coming in with the expiration of warrants.

Shares in Lanka ORIX Leasing Company Plc slipped 1.80%.