Stock market index dips; turnover slumps

Reuters: shares closed at their weakest in more than eight months in typical year-end holiday-thinned trading on Tuesday, with turnover slumping to a near 33-month low as investors stayed away.

The Colombo stock index ended 0.22% lower at 6,202.83, its lowest close since 6 April. It has shed around 2.1% in the 10 sessions through Tuesday. Turnover stood near its lowest since 17 March 2014, at Rs. 111.2 million ($ 745,308), around a seventh of this year’s daily average of Rs. 735.4 million.

“Most of the investors and brokers are on holiday. We may see little price adjustments in shares, but the trading volume will be very low,” said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

Foreign investors sold a net Rs. 10.2 million worth shares on Tuesday, but they have been net buyers of Rs. 611.3 million worth equities as of Tuesday this year.

Top conglomerate John Keells Holdings fell 1%, while large cap Ceylon Tobacco Company closed 1.8% lower, dragging down the overall index.

Rupee ends steady after early fall

Reuters: The rupee ended steady on Tuesday after earlier falling on thin importer dollar demand, dealers said, even as the market looked for cues after the central bank said currency depreciation was not necessarily negative for the economy.

Rupee...

The Central Bank said in a note on Friday that “it is important to understand that depreciation of the rupee has not only negative implications, but also positive implications on the Sri Lankan economy.”

Rupee forwards were active, with one-week forwards closing at 149.70/150.00 after falling to 150.00/20 per dollar earlier in the session. It closed at 149.75/90 on Friday.

The markets were closed for a special bank holiday on Monday in lieu of Christmas holiday on Sunday.

“The market expects the rupee to be lower than 150 in the New Year and depreciate gradually if the Central Bank allows greater flexibility,” said a currency dealer asking not to be named.

Spot-next forwards and the spot rupee were hardly traded, dealers said.

Some dealers said they expect the central bank to allow market forces to determine the rupee’s direction next year, while others said the bank would have to let the currency depreciate or raise key policy rates at a monetary board meeting this week.

The Central Bank increased the spot reference rate by 30 cents to 149.10 after the US Federal Reserve raised interest rates by 25 basis points earlier this month.