Stock market snaps 2 days of gains; rising interest rates weigh

Reuters: Shares closed slightly weaker on Thursday, snapping two straight sessions of gains and hovering near a more than 10-month closing low hit earlier this week, as concerns over rising market interest rates weighed on sentiment.

The Colombo stock index ended 0.04% lower at 6,094.15. The index hit its lowest close since March 2016 on Monday.

“Interest rates are the real concern,” said Acuity Stockbrokers CEO Prashan Fernando. “If the Central Bank raises the rates, it is going to hit the market.”

The Central Bank on Tuesday kept its key rates steady for a sixth straight month, but flagged possible “corrective measures” in the months ahead in a sign further tightening might be on the cards to temper inflation pressures and safeguard a fragile rupee.

Stocks, which have been declining since October, have been hit by political uncertainty arising from a decision of the ruling coalition parties to contest local polls separately, and on worries over a rise in market interest rates.

Yields on treasury bills rose 2-8 basis points at a weekly auction on Tuesday, hovering at more than four-year high.

Market turnover was Rs. 719.3 million ($ 4.78 million) on Thursday, more than this year’s daily average of Rs. 620.2 million.

Foreign investors, who have been net sellers of Rs. 703.8 million worth of shares so far this year, net bought Rs. 322.2 million worth of equities.

Shares of John Keells Holdings Plc rose 0.34 percent, while Sri Lanka Telecom Plc fell 2.51% and Dialog Axiata Plc declined 1.85%.

Sri Lanka’s stock and foreign exchange markets will be closed on Friday for a Buddhist religious holiday.