Stocks edge higher on local buying; rupee steady

Saturday, 18 May 2019 00:00 - - {{hitsCtrl.values.hits}}

REUTERS: Shares closed higher for a second straight session on Friday, moving further away from a near seven-year closing low hit earlier this week, as local investors bought beaten down stocks.

Traders, however, said sectarian violence still weighed on investor sentiment. Most investors have shied away from the market since the 21 April bombings that killed more than 250 people.

The International Monetary Fund (IMF) on Tuesday approved the disbursal of a $164 million tranche of a loan program, bringing the total disbursed to more than $1.16 billion.

Sri Lanka’s economy should still grow 3.5% this year and there has not been a revision yet, the IMF added on Thursday.

Sri Lanka’s economic growth is expected to slump to its lowest in nearly two decades this year, a Reuters poll showed last week. Tourism, foreign investment and overall business activity have all dropped after the bombings.

The benchmark stock index ended 0.15% firmer on Friday at 5,259.71. It fell 1.28% this week.

Turnover was Rs. 1.4 billion ($7.97 million), more than this year’s daily average of around Rs. 565.2 million. Last year’s daily average was Rs. 834 million.

Foreign investors sold a net Rs. 997.3 million worth of shares on Friday, extending the year-to-date net foreign outflow to Rs. 5.7 billion worth of equities.

The rupee ended steady at 175.90/176.10 per dollar in dull trade, market sources said.

Analysts expect the currency to weaken as money flows out of stocks and government securities.

The rupee gained 0.1% this week and is up 3.9% for the year. Exporters had converted dollars as investor confidence stabilised after a $1 billion sovereign bond was repaid in mid-January.

The rupee dropped 16% in 2018 and was one of the worst-performing currencies in Asia.

Foreign investors sold a net Rs. 10.8 billion worth of government securities in the week ended 8 May, extending net foreign outflow to Rs. 20.8 billion so far this year, Central Bank data showed.