Sri Lankan stocks fall with low turnover

COLOMBO (Reuters): Sri Lanka’s share market fell on Friday for a fourth straight session, with turnover slumping to a new 25-month low, as large investors and funds stayed inactive and retail investors cashed shares in thin volume to generate funds to buy other stocks.

The main share index ended 0.2 per cent, or 9.23 points, weaker at 5,930.52, its lowest since 22 December.

Investors have been waiting for new regulations on easing credit from the Securities and Exchange Commission. Large funds remained largely inactive on Friday, awaiting guidance on credit limits from Tilak Karunaratne, the new Head of the SEC. Brokers expect this guidance sometime this month.Shares in the market heavyweight and top conglomerate John Keells Holdings, which accounted for 13 per cent of turnover, ended 0.77 per cent weaker.

Turnover was Rs. 336.7 million ($ 2.96 million), the lowest since 14 December 2009 and far below last year’s average of Rs. 2.3 billion. Volume was 17.9 million shares. Last year’s daily average was a record 102.7 million.

Foreign investors were net sellers of Rs. 50.5 million worth of shares. Net foreign outflow so far this year is 154.2 million after 19.1 billion last year.

The index lost 8.5 per cent in 2011 and was Asia’s 10th-best performer after being top in the region until June. It was Asia’s best in 2009 and 2010.

The rupee closed flat at 113.89/90 to the dollar for a 32nd straight session since a three per cent devaluation effective 21 November, with the Central Bank selling around $ 20 million to defend it, dealers said.

On Tuesday, the Central Bank Governor said the rupee can be “flexible” in future given pressure on Sri Lanka’s balance of payments and declining reserves, but added the bank would not allow “volatile” moves.

The bank has spent more than $ 800 million on keeping the exchange rate steady since 21 November. It spent a net $ 1.36 billion in the first nine months of last year on keeping depreciation pressure at bay.