Reuters: Sri Lankan shares recovered on Wednesday from a three-month closing low in the previous session, helped by gains in banking shares and as foreign investors picked up beaten down stocks.

The benchmark index of the Colombo Stock Exchange closed 0.45% higher, or 28.87 points, at 6,429.04 on Wednesday, after falling 0.1% in the previous session and losing nearly 2% in October.

On Tuesday, the index closed at its lowest since 29 July as investors shrugged off a Central Bank decision to keep rates unchanged.

Foreign investors net bought Rs 393.2 m worth of equities on Wednesday. They have net sold Rs. 1.36 b worth of shares so far this year.

“Today, the market is up on foreign buying. It’s a sporadic purchase from a foreign buyer and there is very little local buying ahead of the budget,” said Richard Pieris Securities ltd Chief Operating Officer Reshan Kurukulasuriya.

“Still, investors are waiting to see if there would be a capital gains tax and the outcome of the budget.”

Prime Minister Ranil Wickremesinghe said last week the Government will introduce a lower tax regime in its upcoming budget to boost faltering investment.

Turnover stood at Rs. 605.9 m, less than this year’s daily average of Rs. 723.6 m.

The CSE Banks Finance and Insurance Index gained more than 1% to end at 16,373.84.

Shares in the biggest listed lender, Commercial Bank of Ceylon Plc, rose 1.90% while Hatton National Bank Plc climbed 1.77% and conglomerate John Keells Holdings Plc gained 0.54%.

Rupee ends weaker on importer dollar demand

Reuters: The Sri Lankan rupee closed lower on Wednesday due to dollar demand from importers, dealers said, even as the market shrugged off comments by the country’s Central Bank Chief about the stability of the currency in the short term.

Central Bank of Sri Lanka Governor Indrajit Coomaraswamy said late on Tuesday that he expected the rupee to stabilise once a stake sale in the southern port of Hambantota to a Chinese investor gets completed in four to five months.

Coomaraswamy said that proceeds of the $1 b stake sale would be converted into rupees, easing the strain on the currency that has been under pressure since mid-September due to seasonal importer demand for U.S. dollars.

Rupee forwards were active, with one-week forwards ending weaker at 148.80/90 per dollar, compared with Tuesday’s close of 148.60/70.

“Today, the exporter (dollar) conversions and inward remittances were not enough to service the importer demand,” a currency dealer said, asking not to be named.

Dealers said selling of Government securities by foreign investors also put pressure on the currency.

Foreign investors have sold a net Rs. 16 b worth of Government securities in the two weeks to 26 October, data from the Central Bank showed.