Bourse steady at near 10-week high; earnings awaited

Tuesday, 12 May 2015 00:00 - - {{hitsCtrl.values.hits}}

REUTERS: Sri Lankan shares ended steady near 10-week high on Monday in thin trade as investors awaited direction on the political front and cues from earnings while foreign investors exited from risky assets for a sixth straight session, stockbrokers said.

The main stock index ended 0.02% up at 7,213.63, at its highest close since 3 March. It has gained 4.53% since the central bank cut key rates on 15 April, while yields on t-bills have fallen 44-57 basis points since then.

“Investors have been waiting for a bit, most investors are on a wait and see approach until the earnings come,” said Dimantha Mathew, Research Manager at First Capital Equities Ltd.

Net foreign outflow from equities was Rs. 12.9 million ($ 96,699) on Monday, extending net outflows of Rs. 753.9 million for the past six sessions. Foreign investors, however, have bought a net Rs. 3.1 billion worth of shares so far this year.

Turnover stood at Rs. 586.7 million ($ 4.4 million), around half of this year’s daily average of around Rs. 1.06 billion.

Analysts said the market could be dull until the perception of political uncertainty is addressed, with many investors in a wait-and-watch mode before the parliamentary elections.

Sri Lanka’s parliament passed reforms on 28 April to reduce some of the President’s powers, although they were far fewer than President Maithripala Sirisena had promised.

Shares of Distillers company of Sri Lanka Plc ended 3.08% firmer, while Ceylon Cold Stores Plc jumped 3.94%.

Rupee forwards weaker on importer dollar demand

REUTERS: Sri Lankan rupee forwards ended slightly weaker on Monday due to importer dollar demand, though the central bank’s moral suasion capped the fall, dealers said.

The market expects the downward pressure on the currency to remain due to lower interest rates and rising importer dollar demand, dealers said.

Actively traded two-month forwards ended at 135.65/75 per dollar weaker from Friday’s close of 135.55/60. One-month forwards were also steady at 134.70/90 per dollar as the central bank defended their levels through moral suasion, dealers said.

“Importers’ demand is putting pressure on the rupee. The moral suasion is holding the rupee and it will be under pressure due to rise in imports in a lower interest rate regime,” said a currency dealer who did not want to be named.

However, Finance Minister Ravi Karunanayake rejected the claim of downward pressure on the currency.

“We don’t see any pressure. There is usual administration of the rupee. We don’t manipulate it now,” Karunanayake told reporters in Colombo.

The central bank said in a statement on Friday that the rupee had depreciated 1.5% against the US dollar through 5 May.

On Wednesday, the central bank allowed a 30 cent, or 0.23%, fall in the spot rupee to 133.30 per dollar, followed by a 10-cent cut to 133.00 on 30 April, until when the spot currency was held at 132.90 since February.

Dealers said the spot rupee did not trade on Monday as well due to moral suasion by the Central Bank.

The Central Bank has been keeping the spot rupee and all forwards up to two-month steady through moral suasion. Central Bank officials were not available for comment.