Stock market falls to over five-week lows; Rupee inches down

Reuters: Sri Lanka’s stock market fell in low volumes and turnover on Friday to over five-week lows as investors cashed in for upcoming IPOs and forced selling by brokers in line with a directive by the Securities and Exchange Commission (SEC).

The island’s main share index .CSE fell 0.96 per cent or 70.90 points weaker at 7,313.02, to a more than five-week low. It hit a record closing high of 7,811.82 on 14 February.

Investors have been selling shares to buy into upcoming initial public offerings along with the fears over political unrest in the Middle East and North Africa.

The market fell in the first three days of the week as stockbrokers sold to collect debts in line with an SEC directive to stop credit transactions by 30 June and reduce brokers’ current debtors’ positions by at least 50 per cent by 31 March.

Foreign investors were net sellers for Rs. 36.22 million worth of shares on Friday and they have sold a net Rs. 4.3 billion worth shares in 2011, after selling a record net 26.4 billion in 2010.

The bourse has still been Asia’s best performer with a 10.2 per cent gain in 2011 after being in the region’s top spot with a 96 per cent return last year.

Turnover was at a 12-week low of Rs. 951 million ($15.7 million), well below last year’s average of Rs. 2.4 billion and less than this year’s daily average of Rs. 3.6 billion.

Traded share volume was 30.3 million, against a five-day average of 63.3 million. The 30-day and 90-day average trading volumes were 90.1 million and 68.7 million respectively. Last year’s daily average volume was 67.9 million.

The bourse is trading at a forward price-to-earnings ratio of 15.6, one of the highest among emerging markets, compared with 12.8 in Asian markets and 11.8 in global emerging markets, Thomson Reuters StarMine data showed.

The rupee edged down at 110.01/03 a dollar from Thursday’s close of 110.00/01 as importers converted dollars, dealers said. They said they expect the rupee to further weaken with the dollar gaining globally.