Reuters: Shares were little changed on Monday after hitting a nine-month low last week as uncertainty over the Government’s monetary and budget policies continued to weigh on the market.

But foreign investors were net buyers on Monday for a second session after five straight sessions of net-selling through Thursday.

They bought a net Rs. 152.7 million ($ 1.02 million) worth of equities on Monday, the highest since 8 December. However, foreign investors have been net sellers to the tune of Rs. 817.03 million so far this year.

The Colombo stock index ended 0.04% up at 6,155.52, slightly above the lowest since April hit on Thursday. Last week the index fell 0.64% and was down 9.7% for 2016, its second straight annual decline.

The day’s turnover was at Rs. 843.6 million.

“Net foreign inflow is a good sign and it will help regain the lost confidence,” said Dimantha Mathew, head of research at First Capital Equities Ltd.

Yields on treasury bill auctions rose 5-6 basis points at a weekly auction on Wednesday, a day after the Central Bank governor signalled reduced intervention to defend the currency.

Shares in Hemas Holdings Plc rose 1.9%, while Teejay Lanka Plc gained 3.69% and Ceylon Tobacco Company Plc added 0.33%.

Rupee steady; downward pressure prevails

Reuters: The rupee ended steady on Monday, but dealers expect it to fall further on growing demand for dollars from foreign banks that facilitate sales of government securities by foreign investors.

The rupee has been under pressure due to rising imports and net selling of government securities by foreign investors, dealers said.

Rupee forwards were active, with two-week forwards ending at 150.60/75 per dollar, steady from Friday’s close.

“The market mainly focused on bonds than currency,” a currency dealer said, asking not to be named.

The Central Bank accepted Rs. 55 billion worth of bonds at an auction on Monday.

Last week, the Central Bank’s moral suasion prevented further decline even as the monetary authority signalled a change in its intervention policy.

Officials from the Central Bank were not available for comments.

Central Bank Governor Indrajith Coomaraswamy said on Tuesday that defending the rupee with foreign exchange reserves “doesn’t seem sensible” as it has always been followed by a sharp depreciation in the currency.

The spot rupee was also hardly traded, dealers said.