Stock market falls for 5th day on rising interest rates

Reuters: Shares fell for a fifth straight session on Friday and posted their lowest close in five weeks, as rising interest rates and lack of new catalysts dented investor sentiment.

The benchmark Colombo stock index ended 0.07%, or 4.61 points, weaker at 6,519.23, its lowest close since 29 April. It declined 0.8% this week, its third straight weekly fall after gaining for six consecutive weeks.

Treasury bill yields rose between four and 35 basis points to near three-year highs in the two weekly auctions through Wednesday despite the Central Bank leaving key policy rates steady for a third straight month on 20 May.

“Investors are waiting to see some positive news and earnings are also not healthy,” a stockbroker said asking not to be named.

Stockbrokers said a rise in interest rates could be detrimental to risky assets if they jumped beyond 12%. The average prime lending rate (AWPR) edged up 15 basis points to 10.15% in the week ended 27 May.

Analysts said market sentiment remained weak as investors were waiting for catalysts such as a big Foreign Direct Investment or initial public offering or inflows from the International Monetary Fund (IMF).

Investors are also concerned about foreign investment outflows, they added, with overseas investors offloading a net Rs. 5.54 billion ($37.74 million) worth of equities so far this year. Foreign investors bought shares worth a net Rs. 49.2 million on Friday.

Turnover stood at Rs. 739.8 million, just below this year’s daily average of around Rs. 791 million.

Shares of Sri Lanka Telecom Plc dropped 3.51%, while those of Ceylinco Insurance Plc fell 0.39%.