Bourse dips to YTD negative growth; index oversold

Tuesday, 25 February 2014 00:42 - - {{hitsCtrl.values.hits}}

Reuters: Shares fell for an eighth straight session on Monday to their lowest close in more than eight weeks, led by large caps amid foreign selling in risky assets as the index fell into oversold territory. The main stock index fell 0.91%, or 54.23 points, to 5,883.05, its lowest close since 27 December. The index has dropped 4.84% in the last 14 sessions, erasing all the gains made since start of this year. It is down 0.50% so far this year, following a 4.8% gain in 2013. The index has fallen into overbought territory, Thomson Reuters data showed. Foreign investors sold a net Rs. 24.1 million ($ 184,000) worth of shares on Monday, extending the outflow to Rs. 5.90 billion in the past 12 sessions as some offshore funds exited the market. The Bourse has seen Rs. 3.90 billion of foreign outflows so far in 2014, after enjoying net inflows of Rs. 22.88 billion last year. Analysts said investors were concerned over possible further foreign outflows, though local investors are still optimistic about risky assets due to falling interest rates. Shares of market heavyweight Ceylon Tobacco Company Plc fell 3.28% to Rs. 1,119.60 while top conglomerate John Keells Holdings fell 1.55% to Rs. 209. The day’s turnover was Rs. 499.4 million, well below this year’s daily average of about Rs. 1.13 billion.

Rupee falls to near 3-month low

Reuters: The rupee ended near a three-month low on Monday due to importer dollar demand, with the market expecting continued downward pressure ahead of festival import demand in April, dealers said. The spot rupee closed at 131.00/10 per dollar, its lowest since 3 December, and weaker from Friday’s close of 130.95/131.00. “There was importer dollar demand. A State bank sold dollars at 131.05 to select banks,” a dealer said, asking not to be named. Dealers said a State bank, through which the Central Bank directs the market, sold dollars at 131.05 in late trade. On Thursday, the currency breached the 130.85 level, which dealers said the Central Bank had been defending for two months through buying and selling of dollars via two State banks. The market expects slight depreciation in the local currency in the near future due to rising seasonal importer demand for dollars. It is usually under pressure in March and early April ahead of the traditional New Year in mid-April. The rupee has also been under pressure due to foreign outflow from equities and Government securities in the past two weeks, data showed. Foreign investors had sold a net Rs. 2.32 billion worth of Government securities in the week ended 19 February, while they dumped Rs. 5.29 billion in stocks in the 12 straight sessions through Monday. The market and analysts have been concerned about the sustainability of the Central Bank’s policy measures to maintain a stable exchange rate, which is defended via selling and buying dollars, in a low-interest-rate regime. Currency dealers and traders say the Central Bank’s policies should work until the market sees a jump in private sector credit growth, which rose 7.5% year-on-year in December from 7.3% a month earlier. The rupee has gained about 3.16% since it hit a record low of 135.20 on 28 August last year. It lost 2.5% in 2013.