Bourse dips to 5 1/2-week closing low despite foreign inflows

Reuters: Shares on Tuesday hit their lowest close in more than five weeks due to profit-booking in blue chips, although foreign investors actively bought into the island nation’s risky assets.

Foreign investors were net buyers of Rs. 389.9 million worth of shares, extending the year-to-date net foreign inflow to Rs. 20.7 billion.

The Colombo stock index ended 0.22% weaker at 6,648.40, its lowest close since 5 May.

Last week, the bourse dropped 0.3%, posting its third consecutive weekly decline.

“There was healthy foreign buying and the turnover was also good. The index fell because retail investors are staying away until they see some direction,” said Softlogic Stockbrokers Deputy CEO Hussain Gani.

Turnover was Rs. 984.5 million ($ 6.44 million), more than this year’s daily average of Rs. 897.9 million.

Analysts said investors are still waiting to see the impact of the recent floods and landslides, caused by the worst torrential rains in 14 years, killing over 200 people and devastating crops.

Inflation could rise in the short term, especially due to crop damage and difficulties in distributing fresh food produce and staple food items, analysts said.

Shares of Sri Lanka Telecom Plc ended 2.5% down, Lion Brewery Plc closed 3.2% weaker, while the country’s biggest listed lender Commercial Bank of Ceylon Plc ended 0.7% down.