Stock market edges up, but rising rates weigh

Reuters: Shares edged up on Wednesday, continuing to recover from an over 10-month closing low hit earlier in the week, as investors picked up battered blue chips, but concerns over rising market interest rates weighed on sentiment.

The Colombo stock index ended 0.1% firmer at 6,096.39. The index hit its lowest close since March 2016 on Monday.

“Investors are looking for bargain prices,” said Reshan Kurukulasuriya, chief operating officer, Richard Pieris Securities Ltd, adding shares of John Keells Holdings Plc saw strong buying.

Sri Lankan stocks, which have been declining since October, have been impacted by political uncertainty arising from a decision of the ruling coalition parties to contest local polls separately, and on worries over a rise in market interest rates.

The Central Bank on Tuesday kept its key rates steady for a sixth straight month, but flagged possible “corrective measures” in the months ahead in a sign further tightening might be on the cards to temper inflation pressures and safeguard a fragile rupee.

Yields on treasury bills rose 2-8 basis points at a weekly auction on Tuesday, hovering at more than four-year high.

Market turnover was Rs. 506.8 million ($ 3.37 million), lower than this year’s daily average of Rs. 616.5 million.

Foreign investors, who have been net sellers of Rs. 1.03 billion worth of shares so far this year, net bought Rs. 152.3 million worth of equities on Wednesday.

Shares of John Keells rose 1.3%, Dialog Axiata Plc gained 2.9% and Sri Lanka Telecom Plc climbed 2%.