Shares edge up; foreign investors exit Keells

Reuters: Shares edged up on Wednesday, helped by index heavyweight John Keells, which managed to eke out gains despite heavy foreign selling, while local investors were cautious ahead of a Parliamentary election.

The main stock index ended 0.07% or 5.11 points up at 7,049.71, edging up from its two-month low hit on Tuesday.

The market saw net foreign outflow of Rs. 786.7 million ($5.87 million), extending net foreign outflow for the past 16 sessions to Rs. 3.32 billion. The Bourse, however, has seen net inflows of Rs. 2.62 billion into equities so far in 2015.

Shares in conglomerate John Keells Holdings Plc, which saw a net foreign outflow of 5.1 million shares on Wednesday, ended 0.98% firmer, helping the overall index to end higher.

Analysts said foreign investors have been selling shares amid expectations the US would hike key interest rates sooner than expected. 

“Except strategic deals, there was low retail participation due to the political uncertainty,” said Reshan Wediwardana, Research Analyst at First Capital Equities.

Analysts said investors are confused because there was no direction on interest rates, economic policies, and the date on the elections.

President Maithripala Sirisena’s Government has said it would dissolve Parliament once some crucial reforms, including an electoral bill, are passed, but is yet to fix a date for the election.

Wednesday’s turnover was Rs. 2.14 billion, its highest since 20 May and well above this year’s daily average of about Rs. 1.11 billion.

Rupee ends steady in dull trade 

Reuters: The rupee ended steady at a record low for the third straight session in dull trade on Wednesday as a State-run bank, through which the Central Bank directs the market, offered dollars at 134, dealers said.

However, dealers said it would not be sustainable to defend the local currency with State bank dollar sales in the long run as this could bring down foreign exchanges reserves to a “dangerous level”.

“The rupee will depreciate in the long run because the Central Bank won’t be able to defend it forever like this,” a dealer said on condition of anonymity.

The rupee is on a fall mainly due to a stronger dollar, the Central Bank has said, while higher imports and rising private sector credit in a lower interest rate regime also weighed on the currency.

The spot rupee ended at 134 per dollar, a record low hit on Friday after the State-owned bank lowered the rupee’s level by 20 cents.

Central Bank Governor Arjuna Mahendran said last week that the country should let market forces determine its rupee exchange rate and warned that trying to buck the global trend of a rising dollar was “suicidal”. 

One-week forwards ended steady at 134.15/35 per dollar, while three-month forwards ended little changed at 135.90/136.10 per dollar compared with Tuesday’s close of 135.85/136.00.

On Wednesday Sri Lanka called on banks and investment houses to propose terms for a foreign currency term financing facility as it seeks to raise up to $500 million to meet the costs of some externally-funded projects stated in its 2015 Budget after the Government raised nearly $1 billion via a 10-year sovereign and development bond on 28 May.