Shares at 1-week low on profit-taking; rupee ends firmer

REUTERS: Shares ended weaker yesterday, falling for the third straight session to its one-week low, as investors booked profits ahead of the presidential vote on 16 November. 

Investor concerns were on the rise over the two top presidential candidates’ election giveaway offers, which officials and a credit rating agency warn would push the country deeper into debt.  

The International Monetary Fund approved the release of the sixth tranche of a $ 1.5 billion loan program for Sri Lanka, while urging authorities to show fiscal discipline.  Sajith Premadasa, the Housing Minister and one of the two presidential frontrunners, has promised free housing for all, free school uniforms and meals for students, fertilisers for farmers and sanitary pads.  His rival Gotabaya Rajapaksa has vowed to cut a 15% value added tax by nearly half and abolish some taxes, as a way to reignite consumption. 

The benchmark stock index ended 0.62% weaker at 5,956.52. Last week, the index rose 1.6% in its fourth straight weekly gain, but is down 1.58% this year. 

Telecommunication stocks were among the top losers, with Sri Lanka Telecom Plc falling 2.7%. Dialog Axiata Plc ended 1.6% down, while Distillers Company of Sri Lanka Plc ended 1.7% lower. 

The rupee ended 0.17% weaker at 180.50/80 per dollar, compared with Tuesday’s close of 180.20/40. The currency is up 1.2% so far this year. 

Foreign investors were net sellers of riskier assets for the 10th time in 11 sessions yesterday. They sold a net Rs. 28.6 million ($ 158,448) worth of shares yesterday, extending the net foreign outflow so far this year to Rs. 5.77 billion worth of equities, according to index data. 

Equity market turnover was Rs. 953.5 million, well above this year’s daily average of about Rs. 680.9 million. Last year’s daily average was Rs. 834 million. 

Meanwhile, foreign investors bought government securities on a net basis for the second time in four weeks, buying a net Rs. 1.55 billion worth of government securities in the week ended 30 October. 

Total foreign outflows from government securities through 30 October stood at Rs. 52.08 billion, Central Bank data said. 

The Central Bank left its key rates unchanged on 11 October after loosening policy this year, although growth is likely to remain subdued as the economy faces rising global risks.