Bourse at one-week low on economic, political concerns

Wednesday, 23 May 2012 00:16 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lanka’s stock market fell to a one-week low on Tuesday as local retail investors sold off shares in thin trade due to political and economic concerns, but foreigners bought into stocks following the rupee’s depreciation.

The main share index fell one per cent, or 52.11 points, to 5,155.61, its lowest since 15 May.

An uncertain rupee, concerns over rising interest rates, and slowing economic growth held back investors while new developments on the political front after the release of former Army Chief Sarath Fonseka also affected sentiment, analysts said.

“We see a cautious approach from local investors due to economic and some political concerns,” said a stockbroker, who asked not to be named. “Foreigners are buying as it is cheaper for them now after the currency depreciation.”

Foreign investors bought a net of Rs. 106.5 million worth shares, extending the total net inflows into the stock market to Rs. 22.1 billion ($ 170.13 million) so far this year.

Analysts said investors are also closely monitoring political risks after Fonseka, a key rival of President Rajapaksa, was freed from jail on Monday.

The market jumped more than two per cent on Wednesday on retail buying on the hope that the release of Fonseka would prompt more foreign inflows.

Turnover was Rs. 296.3 million ($ 2.28 million), well below this year’s daily average of Rs. 1.04 billion.

The index is one of the worst performers among Asian markets, with a 15.13 per cent loss so far this year.

The rupee edged up to 129.75/85 against the dollar from Monday’s close of 129.90/130.10, on exporter dollar conversions, dealers said.