Stock market falls to over 8-month low; Seylan deal weighs

Reuters: Shares fell for a sixth straight session on Tuesday to hit its lowest in more than eight month led by financials as a Seylan Bank share deal cancellation weighed on sentiment.

Stockbrokers said the Colombo Stock Exchange cancelled the Rs. 1.3 billion ($ 8.7 million) Seylan Bank foreign deal on the request of the broker with the consent of both buyer and seller.

Prime Minister Ranil Wickremesinghe ordered a reversal and a probe into the deal as it failed to follow proper procedure.

The Colombo stock index fell 0.45% to hit 6,222.33, its intraday lowest since 8 April, but recovered to close 0.25% weaker at 6,234.75, its lowest close since 29 November. The Bourse has fallen near 1.7% in six straight sessions through Tuesday.

“The market trading was quiet. We expect the turnover levels to fall further. The next supporting level is at 6,000. We expect the index to fall in thin trade,” said Dimantha Mathew, head of research, First Capital Equities Ltd.

Dealers said the cancellation of Seylan Bank has hurt the sentiment of potential foreign buyers.

Turnover stood at Rs. 537.6 million ($ 3.61 million), less than this year’s daily average of around Rs. 744.7 million.

Foreign investors bought a net Rs. 80.3 million worth of shares on Monday, extending the year-to-date net foreign inflow to Rs. 697.5 million worth of equities.

Shares in top private lender Commercial bank of Ceylon lost 1.53%, while Hatton National Bank fell 1.87% to drag down the overall index.