Stock market ends on the up

Saturday, 16 February 2013 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Stocks edged up on Friday, rising off a one-week low with help from Dialog Axiata, but turnover slumped to a seven-week low as investors stayed away, discouraged after an IMF warning on the country’s macroeconomic indicators.

The International Monetary Fund warned this week of slower growth, high inflation and lower tax revenue risks.

The main share index edged up 0.09%, or 4.97 points, to end at 5,830.26, up from its lowest level since 7 February.

“Most investors are waiting for direction with liquidity dried up and high interest rates,” a stockbroker said on condition of anonymity.

Even though yields in T-bills fell for the 10th straight week at an auction on Wednesday, with the 364-day T-bill rate down to a near one-year low of 11.10%, lending rates have been more than 14.3%, Central Bank data showed.

The Central Bank said on Tuesday authorities had decided not to pursue a new loan from the IMF, which had said it may not be in a position to consider any direct or indirect budget support for Sri Lanka.

Analysts and stockbrokers said there was a possibility interest rates would reverse the declining trend if the government resorts to expensive commercial borrowing to bridge the budget gap, after the expected IMF loan did not materialise.

Shares in Dialog Axiata rose 2.15% to Rs. 9.50.

The day’s turnover was Rs. 351.14 million ($ 2.77 million), the lowest since 31 December, and well below this year’s daily average of Rs. 1.12 billion.

Foreign investors were net sellers of Rs. 30 million worth of shares on Friday extending the net foreign outflow so far this year to Rs. 959.33 million this year.

The rupee ended weaker at 126.65/80 to the dollar from Thursday’s close of 126.50/60 due to importer dollar demand, dealers said.