Shares hit over 9-week high despite foreign outflows

Friday, 8 May 2015 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Shares rose to over nine-week high on Thursday as local investors picked up certain stocks on earning hopes, but foreign investors exited from the country’s risky assets. The main stock index closed 0.29% or 20.61 points firmer at 7,212.90, its highest close since 3 March. It has gained 4.52% since the Central Bank cut key rates on 15 April, while yields on T-Bills have fallen 44-57 basis points since then. “There was some volatility in the market with some profit taking. But there were some local buyers,” said Dimantha Mathew, Research Manager at First Capital Equities Ltd. “Foreign selling is simply because of the profit taking.” Net foreign outflow from equities was Rs. 130.5 million ($978,994.75) on Thursday, extending net outflows of Rs. 740.9 million for the past four sessions. Foreign investors, however, have bought a net Rs. 3.1 billion worth of shares so far this year. Turnover stood at Rs. 1.16 billion, above this year’s daily average of around Rs. 1.07 billion. Analysts said the market could be dull until the perception of political uncertainty is addressed and many investors would be in wait-and-watch mode before the Parliamentary elections. Parliament passed reforms last week to reduce some of the President’s powers, although they were far fewer than President Maithripala Sirisena had promised. Shares of Cargills Ceylon Plc jumped 7.26%, while Commercial Leasing and Finance Plc gained 7.14%. Leading mobile phone operator Dialog Axiata Plc rose 1.77%.

Rupee forwards end firm on bank dollar sales

Reuters: Rupee forwards ended slightly firmer as dollar selling by banks outpaced importer demand for the greenback a day after the Central Bank allowed the spot rupee to fall by 0.23%. Actively traded two-month forwards ended at 135.25/40 per dollar, firmer from Wednesday’s close of 135.70/80. One-month forwards were at 134.70/75 per dollar compared with the previous day’s close of 134.80/135.00. “There was a large inflow into a private bank. The import demand was there but the rupee is firmer due to the inflow,” said a currency dealer asking not to be named. The market expects the currency to remain under pressure due to higher imports and lower interest rates, dealers said. On Wednesday, the Central Bank allowed a 30-cent or 0.23% fall in the spot rupee to 133.30 per dollar, following a 10-cent cut to 133.00 on 30 April. The spot currency was held at 132.90 since February through the previous Thursday. Dealers said the spot did not trade on Thursday as well due to moral suasion by the Central Bank. The Central Bank has been keeping the spot rupee and all forwards up to one month steady through moral suasion. Central Bank officials were not available for comment. The International Monetary Fund in a statement on Wednesday emphasised the importance of exchange rate flexibility in protecting international reserves and facilitating external adjustment. The exchange rate has been under pressure after the central bank slashed its key monetary policy rates on 15 April and market interest rates have been on a falling trend since then. Yields on Treasury Bills have fallen 44-57 bps since the rate cut.