Shares slip; diversified stocks top drag

REUTERS: Sri Lankan shares closed slightly weaker yesterday as investors sold diversified stocks such as John Keells Holdings Plc, while block deals boosted turnover. 

Local Investors continued to stay on the sidelines as they waited for some cues about the real impact of floods, while worries over a weaker rupee, political uncertainty and recent fuel price hike also weighed on sentiment. 

Foreign investors accounted for around 70 percent of the day’s buying. They net bought equities worth Rs.568.5 million (US$3.60 million), turning them net buyers of Rs.272.3 million so far this year.

The Colombo stock index ended 0.07 percent weaker at 6,467.80. It fell 0.4 percent for the week. 
Turnover was Rs.1.4 billion, more than this year’s daily average of Rs.983.6 million. 

“We see a reduction in foreign selling pressure and it is positive for the market,” said Dimantha Mathew, head of research, First Capital Holdings. 

“Investors are still waiting to see the real impact of the floods.” 

Heavy monsoon rains have killed 16 people, prompting authorities to warn against landslides and floods in low-lying areas after spill gates had to be opened across the Indian Ocean island. 

Shares of Distillers Company of Sri Lanka Plc fell 2.7 percent, John Keells dropped 0.6 percent, Cargills (Ceylon) Plc ended down 1.8 percent and Sri Lanka Telecom Plc closed 1.5 percent weaker. 
Stock brokers said investors were waiting for more clarity on the political and economic front amid recent fuel price hike, while the depreciation in rupee also weighed on sentiment. 

The rupee hit a fresh low of 158.50 per dollar on May 16 on importer demand for the U.S. currency. 
Analysts said concerns over political instability following President Maithripala Sirisena’s decision to suspend the parliament last month after 16 legislators from his ruling coalition defected, dented market sentiment. 

On May 8, Sirisena urged his own coalition government and the opposition to end a power struggle to achieve ambitious goals including anti-corruption measures.