Stocks slip after IMF loan deal dropped; rate cut could have helped: Broker

Stocks slipped from a two-week high on Tuesday after the Central Bank said the country had decided not to pursue a new IMF loan after months of discussion.

The main share index fell 0.26 per cent, or 15.24 points, to end at 5,836.11.

The Central Bank said Sri Lankan authorities had decided not to pursue the new loan from the IMF, which had said it may not be in a position to consider any direct or indirect budget support to Sri Lanka.

The Central Bank kept policy rates unchanged to support faltering economic growth as it expects inflation to ease from March onwards, with a subsequent fall in deposit and lending rates.

“Another rate cut would have helped the market and many local investors are awaiting a lending rate cut,” said Reshan Kurukulasuriya, Chief Operating Officer at Richard Pieris Securities.

Turnover was Rs. 705.26 million ($ 5.58 million), less than this year’s daily average of Rs. 1.19 billion.

Foreign investors were net buyers of Rs. 38.23 million worth of shares on Tuesday, but they have been net sellers of Rs. 1.26 billion so far this year.