Bourse down from 11-month high on profit taking

Wednesday, 14 May 2014 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Stocks on Tuesday fell from an 11-month closing high, ending a four straight-session winning streak, as investors booked profits, but market sentiment remained positive on lower interest rates and continued foreign inflows. The main stock index fell 0.29%, or 18.20 points, to 6,284.96, slipping from its highest close since 11 June. It rose 1.24% in the last four sessions through Monday, while it enjoyed a Rs. 7.15 billion ($54.85 million) inflow in the last seven sessions through Tuesday. Stockbrokers said many investors have been compelled to return to the stock market due to multi-year low interest rates, which has made fixed income assets less attractive. Ceylon Tobacco Company PLC fell 0.76% to Rs. 1,071.80 after a court ruling on Monday said it should cover up to 60% of the printable area with pictorial warnings depicting the risk of smoking on cigarette packs. Analysts said the ruling could hurt the consumption of tobacco, hitting company profits. Market heavyweight and conglomerate John Keells Holdings PLC fell 0.21% to Rs. 234.50, while shares in Bukit Darah PLC, fell 1.60% to Rs. 669.10.

Rupee edges down on importer dollar demand

Reuters: The rupee ended slightly weaker on Tuesday as late importer dollar demand outpaced exporter dollar conversions, but dealers said the local currency was on an appreciating trend due to steady inflows. The rupee ended at 130.37/42 per dollar, weaker from Monday’s 130.35/37, which was the highest close since 28 June. “The trend is to appreciate, but we may see import demand here and there,” said a currency dealer. Dealers said a state bank bought dollars at Rs. 130.35. Central bank Governor Ajith Nivard Cabraal told Reuters on Friday that the Central Bank has been “giving effect to the present trend in a gradual manner”. Steady inflows from remittances and exporter conversions amid lack of importer dollar demand led to the appreciation in the local currency, said dealers. Some said the rupee would face upward pressure until credit growth and imports reverse their trends. Despite a multi-year low interest rate regime, data showed private sector credit grew 4.4% in February from a year earlier, the slowest expansion since May 2010, while imports in February fell 6.2% on year. Dealers said lack of credit growth and a contraction in imports could hit the economy unless the Government props up expansion through infrastructure funding. The Central Bank, in its monetary policy statement last month, however, expressed confidence that private sector credit growth would rebound in the second quarter and push up the pace of economic growth. The currency has hovered between 130.55 and 130.70 since 3 March through Thursday, Thomson Reuters data showed, with the Central Bank intervening to smoothen any sharp volatility. Both the stock and foreign exchange markets are closed on Wednesday and Thursday for public and bank holidays. Normal trading will resume on Friday.

Foreign investors were net buyers of Rs. 141.1 million ($ 1.08 million) of stocks on Tuesday. They have been net sellers of Rs. 262.2 million so far this year. The day’s turnover was Rs. 757.6 million, below this year’s daily average of Rs. 1.04 billion. Analysts, however, said lower credit growth has raised questions around growth and earnings amid lower consumer spending. Despite a multi-year low interest rate regime, private sector credit grew just 4.4% in February from a year earlier, the slowest expansion since May 2010. That compared with growth of 5.2% in January and 13.3% in February 2013.