REUTERS: Sri Lankan shares closed little changed yesterday as most investors stayed on the sidelines to see the real impact of a hike in fuel prices, brokers said.
State-run fuel retailer Ceylon Petroleum Corp (CPC) raised retail prices for gasoline and diesel from Thursday midnight in response to rising oil prices.
The Colombo stock index fell for a fifth straight session and ended 0.01 percent weaker at 6,478.87, its lowest close since April 11. The index lost 0.4 percent this week, in its third straight weekly fall.
“Most of the investors were on the sidelines waiting to see the real impact of the fuel price increase,” said Atchuthan Srirangan, assistant manager-research at First Capital Holdings PLC.
“Though the fuel price increase was expected, it could impact the bottom lines of manufacturing and transportation companies directly, while it will also push inflation and other costs, and could impact other companies too.”
The market shrugged off the central bank’s policy decision earlier in the day as it was widely expected, said Srirangan.
The Central Bbank kept its key policy rates steady, a little more than a month after it unexpectedly cut the main lending rate, forecasting a modest recovery in the economy this year after growth slumped to a 16-year low in 2017.
Analysts said the depreciation of rupee also weighed on investor sentiment as it is likely to hit profits of some listed firms that rely heavily on imports.
The rupee hit a fresh low last week on importer demand for the U.S. currency.
Shares of BRAC Lanka Finance Plc fell 23.4 percent, Dialog Axiata Plc dropped 1.4 percent and conglomerate John Keells Holdings Plc ended down 0.2 percent.
Fitch Ratings has said that recent political developments in Sri Lanka have created some uncertainty over reform momentum and fiscal consolidation, and prolonged upheaval could undermine investor confidence ahead of large external debt maturities in 2019-22.
Sri Lankan President Maithripala Sirisena on Tuesday urged his own coalition government and the opposition to end a power struggle in order to achieve ambitious goals including anti-corruption measures.
Turnover stood at Rs.769.5 million (US$4.88 million), less than this year’s daily average of Rs.1.03 billion. Foreign investors net bought Rs.24.3 million worth of equities yesterday, but the market has seen a net foreign outflow to Rs.335.4 million worth of equities so far this year. ($1 = 157.8000 Sri Lankan rupees)