Shares recover from 2-week low on block trade; rupee slips

(Colombo) REUTERS: Sri Lankan shares snapped a four-session losing streak to end tad firmer yesterday on block trading of select shares, bouncing back from a two-week low hit on the previous day, while the rupee fell on importers’ dollar demand, market sources said. The benchmark stock index ended 0.11 percent higher at 5,348.57, recovering from its lowest closing level since June 11 hit on Tuesday. It fell 0.38 percent last week and is down 11.63 percent so far this year. 

Foreigners sold on a net basis for the 12th session out of the last 13, the bourse data showed.  The currency edged down at 176.50/60 per dollar, compared with Tuesday’s close of 176.45/55, market sources said. The rupee is up 3.45 percent for the year. 

The island nation raised US $ 2 billion via five-year and 10-year sovereign bond sales, its Central Bank said on Tuesday, tapping global capital markets for the second time in three months. 

Analysts expect the rupee to weaken further as money flows out of stocks and government securities. 

The rupee dropped 16 percent in 2018 and was one of the worst-performing currencies in Asia. Foreign investors bought a net Rs.879.6 million worth of government securities in the week ended June 19, but the island nation’s net foreign outflow was at Rs.20.7 billion so far this year, the Central Bank data showed. 

The Central Bank cut its key interest rates on May 31 to support a faltering economy as overall business and consumer confidence slumped following deadly bomb attacks in April. Sri Lanka is unlikely to hit its full-year economic growth target of 3-4 percent following the bombings, junior Finance Minister Eran Wickramaratne told Reuters last month. A Reuters poll has forecast growth to slump to its lowest in nearly two decades this year. 

Yesterday’s stock market turnover was Rs.128.1 million, well below this year’s daily average of about Rs.549.1 million. Last year’s daily average was Rs.834 million. 
Foreign investors sold a net Rs.8.2 million worth of shares yesterday, extending the year-to-date net foreign outflow to Rs.6.24 billion.