Stock market ends higher as investors pick large caps

Reuters: Sri Lankan stocks recovered from a near-10-month low to end slightly firmer on Thursday as investors bought large-cap shares while concerns over political instability and the rally in interest rates weighed on market sentiment.

The Colombo stock index ended up 0.05% at 6,130.05. In the previous session, it hit 6,127.08, its lowest since 4 April.

Market heavyweight John Keells Holdings Plc rose 0.29%, before it posted a 32% rise in its December quarter profit to Rs. 5.1 billion.

“We expect good results in December quarter, but the results are unlikely to move the market because of the uncertainty factor,” said Dimantha Mathew, Head of Research, First Capital Equities Ltd.

Yields on treasury bills rose two to five basis points at a weekly auction on Wednesday to a near five-month high after the Central Bank Governor signalled reduced intervention to defend the rupee.

Rising market interest rates, which move in tandem with T-bill yields, have been a cause for concern, brokers said. 

Foreign investors net bought Rs. 106.8 million worth of equities on Thursday, but they have been net sellers of Rs. 1.65 billion worth shares so far this year. 

The day’s turnover was Rs. 287.7 million. Investors are also concerned about possible political uncertainty as the main coalition partners in the Government are contesting local polls separately, analysts said.

Rupee edges up in dull trade

Reuters: The Sri Lankan rupee ended slightly firmer in thin trade on Thursday as dollar selling by exporters outpaced demand for the US currency from importers, dealers said, a day after the Central Bank revised the spot reference rate by 10 cents to a record low.

Rupee forwards were active, with two-week forwards ending at 150.85/90 per dollar. They closed at 150.90/151.00 on Wednesday. 

The spot rupee was quoted around the Central Bank’s revised reference level of 150.25, dealers said.

“There was no big demand and we have seen some selling in the market which helped the rupee to strengthen a bit,” a currency dealer said, asking not to be named. 

“The rupee will be under pressure (to depreciate) as we will be getting seasonal (import) demand in a month or two. There is no reason for it to appreciate unless the country gets a large inflow.” An index tracking the dollar against a basket of major currencies slid to a seven-week low of 99.793 earlier in the day.