Bourse dip persists; foreigners turn net sellers

Saturday, 24 January 2015 02:43 - - {{hitsCtrl.values.hits}}

Reuters: Shares fell to a one-month closing low on Friday, led by selling by foreign investors, slipping by more than 3% in the week on concerns over political stability as the government got ready to present its interim budget on Jan. 29. The main stock index ended 0.72% lower, or 52.96 points down, at 7,276.63, its lowest close since 24 December. It lost 3.15% in the latest week. “Still there is a bit of uncertainty in the minds of people, and investors are adopting a wait-and-see approach. We believe confidence will be restored after the budget,” said First Capital Equities Ltd. Research Manager Dimantha Mathew. There was net foreign outflow of Rs. 518.3 million ($ 3.93 million) on Friday, the highest net offshore selling since 4 November. Foreign investors bought a net Rs. 22.07 billion worth of stocks last year. The day’s turnover was Rs. 987.4 million, less than last year’s daily average of Rs. 1.42 billion, exchange data showed. The newly-elected government reappointed Thilak Karunaratne as head of the market regulator after market hours on Wednesday, and said he would investigate suspected deals in the stock market. Stockbrokers said Karunaratne’s appointment and the investigations would pull down the index in the near term, but would instil confidence over the long term. President Maithripala Sirisena’s coalition government will present an interim budget on 29 January with an aim to cut cost of living. Shares in Carsons Cumberbatch Plc fell 4.71%, while top conglomerate John Keells Holdings Plc fell 1.37%.

Rupee forwards end weaker on late importer dollar demand Reuters: Rupee forwards ended a tad weaker on Friday on importer dollar demand, while the market waited for direction from an interim budget next week, dealers said. Dealers said fears of possible depreciation also kept exporters away from the market. Four-day forwards ended at 132.95/133.05 per dollar, compared with Thursday’s close of 132.90/133.00. They have fallen 0.45 percent in the week, market data showed. “It is hard to predict the movement of the rupee as nobody knows what the new government’s policies are,” a dealer said. “With next week’s budget, there could be some clear direction.” Dealers said exporters sold dollars in early trade before importer dollar demand resulted in downward pressure. President Maithripala Sirisena’s new Government is scheduled to announce an interim budget on 29 January. The recent depreciation in the Japanese Yen and the Euro and lower interest rates have encouraged more imports, dealers said. Market players expect the rupee to depreciate to 135 in the near future, either due to a policy decision in the Budget or if the Central Bank allows it to fall gradually by stopping intervention. Sirisena, who announced an interim cabinet on 12 January, said he would carry out reforms to fight corruption in the 100 days to a parliamentary election. The market is expecting a flexible exchange rate with more foreign grants under the new Government as opposed to the controlled exchange rate regime earlier. The spot currency was not traded on Friday.