Stocks end at over one-week low; large-cap shares lead fall

Reuters:  Sri Lankan shares fell for the second straight session on Tuesday, hitting a more than one-week low in thin trade, as global stock markets came under pressure and on investor concern over rising domestic interest rates, analysts said.

A drop in bank shares kept European shares under pressure on Tuesday, after losses in Asian markets sent investors scurrying for safe havens. 

Yields on treasury bills rose between 7 and 23 basis points at a weekly auction last Tuesday with yields on 182-day and 364-day T-bills rising to more-than-two-year highs, signalling a further rise in market interest rates, which move in tandem with yields.

The main stock index .CSE ended 0.45 % weaker, or down 28.95 points, at 6,372.71, its lowest close since Feb. 1.

“Investors are very concerned about the rising interest rates, weak economic outlook and uncertainty over the IMF facility,” said First Capital Equities Ltd Research Manager Dimantha Mathew,.

The IMF on Friday urged Sri Lanka to take steps to reduce its fiscal deficit and raise tax revenues to help improve its balance of payments.  

The index has fallen 7.6 % this year through Tuesday as foreign investors, unnerved by global concerns over China’s economy, cut their exposure.

Concerns over sluggish economic growth in China, a likely interest rate hike by the U.S. Federal Reserve and falling oil prices have forced some investors to sell risky assets.

Foreign investors were net buyers of Rs. 82.9 million worth shares on Tuesday. But they have been net sellers of Rs. 194.7 million worth equities so far this year.

Turnover was Rs. 415.5 million ($2.89 million), the highest since 2 February but less than this year’s daily average of Rs. 794.4 million.