Stock market ends weaker; rising rates weigh

Reuters: Shares edged down for a fifth straight session on Friday to a near two-year low in thin trade as concerns over rising interest rates and a ratings downgrade pushed investors away from risk assets, traders said.

Sri Lanka’s benchmark share index closed 0.06% lower, or 3.50 points, at 6,057.22, the lowest close since 7 April 2014.

Its next support level is expected to be 5,800 points, analysts said.

“Declining trend is continuing with the selling pressure remaining. There are no buyers to take up the huge quantities which are to be sold,” said Dimantha Mathew, Head of Research, First Capital Equities Ltd.

“Increasing interest rates and negative sentiment are continuing with the unclear policy outlook.”

On Wednesday, Fitch Ratings downgraded the ratings of some listed blue chip firms and strategic state firms. The ratings agency downgraded Sri Lanka’s sovereign rating to B-plus from BB-minus on Monday.

The index remained in oversold territory for the ninth straight session, with the 14-day relative strength index at 18.647 on Friday, compared with Thursday’s 18.840, Thomson Reuters data showed.

A level between 70 and 30 indicates the market is neutral.

Yields on treasury bills have risen between 54 and 105 basis points to a more than two-year high since the central bank raised the policy rates by 50 bps on 19 February.

Turnover stood at Rs. 334.4 million ($2.32 million), less than half this year’s daily average of Rs. 708.2 million.

Foreign investors were net buyers for the sixth straight session, purchasing Rs. 42.8 million worth of shares.

Shares in Commercial Leasing & Finance Plc fell 5.13%, while Bukit Darah Plc dropped 2.64%.