Stock market edges up on thin volumes; rupee flat

Thursday, 21 July 2011 00:54 - - {{hitsCtrl.values.hits}}

Index up from near 6-month low in thin volumes
Foreign outflow continues despite better rating
State bank protects rupee amid importer dlr demand

(Reuters): Sri Lanka’s stock market narrowly shaved to close up on Wednesday in thin volumes from a near six-month low level falls as investors snapped up selected large caps.

The main share index ended 0.1 percent or 6.76 points up to 6,682.46, moving away from its near six-months closing low of 6,668.01 points hit on 3 January.

“The market remained volatile during the day with activity levels being driven by local retailers,” John Keells Stockbrokers said in a research note.

On Monday, Fitch Ratings upgraded Sri Lanka’s Long-Term Foreign and Local Currency Issuer Default Ratings to ‘BB-’, three notches below investment grade, from ‘B+’, while Moody’s Investors Service changed the rating outlook to positive on a B1 rating, four notches below investment grade. On Tuesday, S&P changed the foreign currency rating outlook to positive from stable and affirmed its ‘B+/B’ foreign currency rating on Sri Lanka.

Cigarette manufacturer Ceylon Tobacco closed 3.91 percent firmer at Rs. 375 a share while market heavyweight and the largest conglomerate John Keells Holdings edged up 0.30 percent.

Since 1 June, the index has shed 9.5 percent, mainly due to forced selling in line with the policy of Sri Lanka’s Securities and Exchange Commission (SEC) to recover margin debt, aiming to eliminate all credit dealing by year’s end.

The bourse is still up 0.7 percent so far this year. It was the top performer in the Asia-Pacific region in 2010 and 2009 with 96 percent and 125 percent returns, respectively.

The day’s turnover was 1.38 billion Sri Lanka rupees ($12.6 million) well below last year’s average of 2.4 billion and this year’s 2.74 billion. Traded volume was 46.2 million, the lowest since 4 May, against a five-day average of 72.9 million. The 30-day and 90-day average trading volumes were 141.4 million and 104.8 million, respectively. Last year’s daily average was 67.9 million.

The rupee ended steady at 109.49/50 a dollar for a fourth day as a state bank, through which the Central Bank directs the market, continued selling dollars at 119.50 despite heavy importer demand, dealers said.