Shares end near 5-month closing low; foreign investors buy

Reuters: Sri Lankan shares ended largely unchanged near a five-month closing low yesterday as gains led by conglomerate John Keells Holdings PLC were offset by losses in large-cap shares such as Ceylon Tobacco Company , while foreign investors turned net buyers of equities.

Foreign investors, who sold shares of John Keells in the previous two sessions, bought the market heavyweight after the lower price made it attractive, stockbrokers said.

Reports that MSCI Frontier Markets 100 Index, which captures large- and mid-cap representation across 29 frontier markets, will remove Keells from its index triggered foreign selling in the last two sessions.

Foreign investors bought net Rs. 234.6 million ($1.48 million) worth of equities yesterday, but the market has seen a year-to-date net foreign outflow to Rs. 1.14 billion worth of shares.

The Colombo stock index ended 0.04% firmer at 6,401.03, its first gain in five sessions. It is down 1% over the week.

“Keells bounced back on foreign buying. Foreign investors are looking at the market with optimism,” said Softlogic Stockbrokers Deputy CEO Hussain Gani.

Turnover was Rs. 839.7 million ($5.30 million), less than this year’s daily average of Rs. 996.4 million.

A weaker rupee, political uncertainty and the recent fuel price hike also weighed on sentiment, with local investors mostly keeping to the sidelines as they gauge the real impact of the floods that killed 24 people in the nation over the past week, brokers said.

Shares of John Keells gained 4% while Ceylon Tobacco Company fell 0.7%.

The rupee hit a fresh low of 158.80 per dollar yesterday owing to dollar demand from foreign banks and importers, but ended steady on late inflows from remittances.

Analysts said market sentiment was dented by concerns over political instability following President Maithripala Sirisena’s decision to suspend Parliament last month after 16 legislators from his ruling coalition defected.

On 8 May, Sirisena urged his own coalition Government and the Opposition to end a power struggle to achieve ambitious goals including anti-corruption measures.