Stock market dips to more than 1-month closing low; large caps down

Reuters: Sri Lanka’s benchmark index hit a more than one-month closing low on Thursday, dragged down by large cap shares, as investors largely stayed on the sidelines amid confusion over falling bond yields, stockbrokers said.

The benchmark Colombo stock index ended 0.09% lower at 6,501.89, its lowest close since 1 August.

Analysts said they expected shares to rise after results of the central bank’s weekly treasury bill auction on Wednesday showed yields fell between 23 and 34 basis points, with the benchmark 91-day treasury bill yield falling for the first time since 8 July.

“Many investors are confused because while t-bill yields are coming down, the short term fixed-deposit rates offered by banks are very high,” said Acuity Stockbrokers COO Prashan Ferbando.

Foreign investors net sold Rs. 22.7 million ($156,444) worth of shares on Thursday, the first time in seven sessions, extending the year-to-date net foreign outflow to Rs. 2.77 billion worth of equities.

Turnover stood at Rs. 758.4 million, slightly higher than this year’s daily average of Rs. 752.4 million. Shares of Ceylon Tobacco Company Plc fell 0.50%, while Ceylon Cold Stores Plc ended 1.53% lower and John Keells Holdings Plc lost 0.67%.+

Rupee ends firmer on inward remittances

Reuters: The rupee ended firmer on Thursday as late inward remittances ahead of the annual haj pilgrimage surpassed the mild dollar demand from importers, dealers said.

The spot rupee ended at 145.00/15 per dollar, compared with Wednesday’s close of 145.40/45. One-week forwards were quoting at 145.15/30, compared with the previous day’s close of 145.65/70, but were not traded as the spot was actively traded.

The spot rupee is usually managed by the central bank, and market participants use the forward market levels for guidance on the currency.

“There were inward remittances in the latter part of the day ahead of the festival,” a currency dealer said, asking not to be named.

Muslims in Sri Lanka will celebrate Eid al-Adha on Monday.

Dealers said seasonal importer demand would pick up from mid-October.

Central Bank Governor Indrajith Coomaraswamy said last week that the currency was not under upward pressure as capital inflows had not been of sufficient magnitude to exert such pressure.

The central bank has largely not intervened to defend the rupee ever since a dual-tenure sovereign bond issue raised $1.5 billion in July.