Bourse closes week negative

Reuters: Sri Lanka’s stock market lost in thin volume on Friday with foreign selling, as lack of credit kept investors on the sidelines ahead of the December monetary policy rates announcement, while the Central Bank held the rupee steady.

The Central Bank after the market closed kept policy rates unchanged for an 11th straight month as expected.

The main share index lost 0.82 per cent or 48.63 points to 5,892.69, lowest since 25 November.

The day’s turnover was Rs. 462.6 million ($ 4.06 million), far below last year’s average of 2.4 billion and this year’s 2.4 billion. Volume slumped to 5-day average of Rs. 511.2 million, the lowest weekly average this year.

Credit for share buying has been a concern since the Securities and Exchange Commission curbed the amount brokerages could extend sharply, although brokers expect the regulator under a new Chief to accommodate more lending. The market is going through a typical year-end bout of pre-holiday slowness. Market heavyweight John Keells Holdings, which fell 1.1 per cent to Rs. 174.80, led the overall market fall.

The bourse saw a net foreign outflow of Rs. 21.6 million on Friday, and foreign investors have sold 18.2 billion thus far in 2011, and a record 26.4 billion in 2010.

Total volume was 17.1 million shares, lowest since 11 November.

The 30-day and 90-day average trading volumes were 48.7 million and 94.2 million. Last year’s daily average was 67.9 million.

The Colombo Stock Exchange is Asia’s 12th-best performer with a year-to-date loss of 11.2 per cent after being at the top until June. It delivered Asia’s best returns in 2009 and 2010.

The rupee closed flat at 113.89/90 rupees a dollar for an 18th day despite heavy dollar demand, as the Central Bank spent $ 30 million defending it, dealers said.

Two traders Reuters spoke with said the dollar demand came from importers as well as a foreign bank, which had facilitated some offshore clients’ sale of Sri Lankan Treasury securities.

Since a three per cent devaluation on 21 November, the bank has spent around $ 440 million to hold the exchange rate steady. It spent almost $ 2 billion this year until the end of September holding back depreciation pressure.