Shares fall for 4th session to over 20-mth closing low

Reuters: Shares fell for a fourth straight session on Wednesday to their lowest close in more than 20 months due to rising yields and as investors sold their holdings to settle margin trading, brokers said.

The main stock index erased early gains and closed 0.35%, or 22.06 points, weaker at 6,261.18, its lowest close since 7 May 2014. The stock market had shed about 9.2% this year through Wednesday’s close due to foreign outflows, triggered by global concerns over China’s economy and rising market interest rates locally.

The yield on one-year T-bills rose 32 basis points to a more than two-year high of 7.80% at the weekly auction on Wednesday. Analysts expect market interest rates to rise in tandem with T-bill yields.

“The market could not sustain the morning buying interest. But the good sign is that the selling did not come in a big way,” said Dimantha Mathew, Research Manager at First Capital Equities Ltd.

“It looks like the prices are attractive at these levels. So, it may consolidate at these levels.”

The Bourse dipped further into an oversold territory with the 14-day relative strength index at 12.070 points versus Tuesday’s 12.533, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral.

Foreign investors were net sellers of Rs. 11.33 million ($78,707.88) worth of equities, extending the year-to-date net foreign outflow to Rs. 2.36 billion.

Stockbrokers said some foreign funds have already started selling blue-chips, including market heavyweight John Keells Holdings and lender Commercial Bank of Ceylon.

Turnover was Rs. 606.95 million, the lowest since 8 January, and lower than this year’s daily average of Rs. 861.2 million.

John Keells shares fell 0.50% and Commercial Bank of Ceylon dropped 0.85%.