Stock market ends lower; heavyweights down

Reuters: Stocks closed lower on Tuesday for a second straight session as investor sentiment took a hit on political uncertainty and as yields on short-term bonds rose.

The Colombo stock index ended 0.24% weaker at 6,186.52, stepping away from its highest close since 30 December hit on Friday, when it gained after the European Commission proposed increased market access for Sri Lanka as a reform incentive. “Rising interest rates and political uncertainty are really hurting the market,” said Reshan Kurukulasuriya, chief operating officer, Richard Pieris Securities Ltd.

“Market is stagnant with no major investment coming into the country.”

Investors are concerned over possible political uncertainty as the main coalition partners in the Government are contesting local polls, likely mid-year, separately, analysts said.

Yields on treasury bill auctions rose 9-19 basis points at a weekly auction last week to a four-month high after the Central Bank Governor signalled reduced intervention to defend the rupee currency. Turnover stood at Rs. 510.7 million ($ 3.41 million) on Tuesday, with foreign investors buying a net Rs. 60.4 million worth of equities. They have net sold Rs. 1.56 billion worth of shares so far this year. Shares in Commercial Leasing and Finance Plc fell 5.88%, while Carson Cumberbatch Plc lost 2.78% and Sri Lanka Telecom Plc slipped 1.37%.

Shares in biggest listed lender Commercial Bank of Ceylon Plc fell 0.29%.

Rupee ends steady; foreign bank dollar sales offset importer demand

Colombo (Reuters): The rupee closed little changed in thin trade on Tuesday as dollar selling by foreign banks offset importer demand for the US currency, even as the rupee is expected to weaken after the Central Bank allowed flexibility in the exchange rate, dealers said.

The rupee has been under pressure due to rising imports and net selling of government securities by foreign investors, while the Central Bank has adjusted the spot rupee reference rate to a record low of 150.15 rupees per dollar.

The spot rupee, which did not trade for nearly a month, was actively traded on Tuesday, and closed at 150.15/25 per dollar compared with Monday’s close of 150.15/18, dealers said.

“There were sellers in the morning but we have seen some demand building up in the latter part of the day. And we have seen demand is building up for two-week (forwards),” a currency dealer said, asking not to be named. The rupee was under pressure with foreign investors selling a net Rs. 16.1 billion ($ 107.3 million) worth of government securities in the week ended 11 January, latest Central Bank data showed. The market has also shrugged off Finance Minister Ravi Karunanayake’s announcement last week of higher returns and immediate residence visas to foreigners who invest at least $ 300,000, in a move to ease pressure on the rupee. The Central Bank’s moral suasion in early January prevented a sharp fall in the rupee even as the monetary authority signalled a change in its intervention policy. Central Bank Governor Indrajith Coomaraswamy said earlier this month 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.