Bourse recovers from early losses; Rupee down

Tuesday, 19 June 2012 02:00 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lankan shares ended a tad firmer on Monday in thin trade as late buying in blue chips helped to offset short term profit taking by retail investors earlier in the day, brokers said.

The Colombo Stock Exchange’s main index fell 1.1% in early trade, but recouped its losses and closed 0.14% or 6.89 points firmer at 4,998.10, its highest since May 25.

“There was profit taking from retailers, who may be uncertain about the long term outlook, but later investors bought attractive blue chips,” said an analyst on condition of anonymity.

Brokers said that investors were still cautious, looking for clear directions on economic growth, interest rates, and the volatile rupee exchange rate.

On Friday, the IMF revised down its forecast for Sri Lanka’s economic growth to 6.75 per cent this year, from an earlier estimate of 7.5 per cent, citing tighter credit and a weaker currency.

After the market closed, government data showed that the $59 billion economy grew at a faster than expected annual rate of 7.9% in the first quarter of 2012, slowing from 8.0% in the same quarter last year.

The market fell 10.8% in May due to economic and political worries. It has recovered 3.4% so far in June.

Market heavyweight and the top conglomerate John Keells Holdings gained 0.80 per cent to 189.80 rupees. The day’s turnover was 295.4 million rupees ($2.25 million), well below the daily average of 935.5 million rupees this year.

Foreign investors were net sellers of seven million rupees worth of shares on Monday, but so far this year foreign investors were net buyers of 22.62 billion rupees.

The rupee edged down to 132.10/20 against the dollar from Friday’s close of 131.70/80 on importer dollar demand in light trade, dealers said. It hit an all time low of 133.60 on Tuesday on importer dollar demand.

On Thursday, Treasury Secretary P.B Jayasundera told Reuters the rupee had hit its low and would stabilise around 125 per dollar in the medium term.

The currency has depreciated 16.4 per cent since 21 November, when the Government allowed a 3 per cent devaluation.