Tuesday, 27 August 2013 00:15
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Reuters: Stocks closed at their lowest level in more than four months on Monday with trading volume slumping to near three-week lows as foreign outflows continued for the third day, while retail investors stayed on the sidelines amid a falling rupee, brokers said.
The main share index ended down 0.94%, or 56.18 points, at 5,895.65, its lowest close since 22 April.
Analysts said investors were cautious over the fall in the rupee and earnings outlook. The local currency hit a near one-year low on Monday due to renewed selling of Government bonds by foreign investors.
Shares in Nestle Lanka Plc ended 7.72% lower at Rs. 2,035 while Dialog August fell 2.35% to Rs. 8.30.
Foreign investors were net sellers for a third straight session, selling Rs. 99 million ($ 748,000) worth of shares, extending net outflows to Rs. 264 million in the last three sessions. However, they have been net buyers of Rs. 18.25 billion worth of shares so far this year.
Turnover was Rs. 365.9 million, its lowest since 8 August, and well below this year’s daily average of about Rs. 916.6 million.
The Sri Lankan Rupee on the other hand fell to a near one-year low against the dollar on Monday due to importer demand for the greenback amid renewed selling of government bonds by foreign investors.
The market expects the rupee to depreciate further with exporters holding onto dollars and foreign investors gradually exiting treasury bonds.
Dealers said banks switched to one-day currency forwards in an inactive spot market.
The spot rupee fell to 132.80 per dollar, its lowest since Sept. 14, Thomson Reuters data showed. It had closed at 132.50 on Friday.
The spot next or one-day forward closed at 132.80/90 per dollar, compared with Friday’s close of 132.75/85.
“Demand (for dollars) continued. The spot next is weaker on importer dollar demand but the demand from foreign bond holders is also there,” a dealer said.
The rupee fell around 4% between June 7 and July 18, after foreign investors started pulling out of Sri Lanka’s treasury bonds due to a rise in U.S. treasury yields. The benchmark 10-year note yield is hovering around a two-year high at 2.8275%.
