Shares steady in dull trade

Saturday, 6 February 2016 03:36 - - {{hitsCtrl.values.hits}}

Reuters - Sri Lankan shares ended steady on Friday in thin trading volume as investors awaited cues on the macro economy amid a rise in interest rates and as global economic concerns dented sentiment.

The main stock index ended 0.03% firmer at 6,404.64.

Stockbrokers said local participation was low as some investors were on holiday in the short trading week. Markets were closed on Thursday for Independence Day.

“Interest rates are slowly picking up and the market is concerned over that,” a stockbroker said on condition of anonymity.

Turnover was 307.9 million rupees (USD 2.14 million), less than half of this year’s daily average of 828.5 million rupees.

The index had fallen 7.1% this year through Friday as foreign investors, unnerved by global concerns over China’s economy, cut their exposure.

Foreign investors sold a net 60.6 million rupees worth of shares on Friday, extending the year-to-date net foreign outflow to 259.3 million rupees.

Analysts said a rising trend in local interest rates has been a concern and local stocks could come under further pressure.

Yields on treasury bills rose between 7 and 23 basis points at a weekly auction on Tuesday with yields on 182-day and 364-day T-bills rising to more-than-two-year highs, signalling a further rise in market interest rates, which move in tandem with the yields.

Shares of market heavyweight John Keells Holdings Plc rose 0.31%, while Sri Lanka Telecom lost 3.6%.

Rupee forwards end steady amid dollar sales by banks

Reuters - Sri Lankan rupee forwards ended steady on Friday as dollar selling by banks offset demand for the greenback from importers, dealers said.

Rupee forwards have been active since 27 January as there has been little trading in spot currency with banks reluctant to trade below the 144.00 level amid moral suasion by the Central Bank. Officials from the Central Bank were not available for comment.

Dealers said one-week rupee forwards, which act as a proxy for spot, ended at 144.20/30 per dollar, hardly changed from Wednesday’s close of 144.25/30.

Markets were closed on Thursday for the Independence Day holiday.

“I am not sure how far the Central Bank can prevent depreciation through moral suasion,” said a currency dealer, asking not to be named.

The Central Bank usually intervenes in high volatility though it floated the rupee on 4 September.

The rupee is under pressure despite a 150-basis-point increase in commercial banks’ statutory reserve ratio from 16 January. The Central Bank kept its key policy interest rates unchanged last week.

Commercial banks parked 63.7 billion rupees (USD 442.51 million) of surplus liquidity on Wednesday using the Central Bank’s deposit facility at 6%, official data showed.