REUTERS: Sri Lankan shares fell to a near-one-month low yesterday as foreign investors exited risky assets on fears of a China-led global economic slowdown and panic selling by local investors for month-end settlements and margin calls.
The main stock index was down 1.09 percent, or 79.81 points, at 7,251.28 at 0654 GMT, its lowest level since July 28. The index has fallen 2.9 percent in the last two sessions, mainly on concerns of a global sell off.
Turnover stood at Rs.749.1 million ($5.58 million).
“With the huge fall on Monday there was some panic selling,” said Dimantha Mathew, a research manager at First Capital Equities (Pvt) Ltd. “The market will be slow, dull and in the red this week. We expect market to recover in the fresh month.”
Stockbrokers said foreign selling was seen yesterday as well after offshore investors sold a net Rs.163.6 million worth of shares on Monday, extending the year-to-date net foreign outflow to Rs.1.33 billion. The Sri Lankan rupee traded weaker yesterday as a state-run bank, through which the central bank usually directs the market, raised the currency’s peg for a third straight session. The state bank raised the rupee exchange rate against the dollar by 15 cents, allowing it to depreciate to 134.25.
The rupee was trading 0.11 percent weaker from Monday’s close of 134.10.
“There is heavy importer demand, but exporters are not convinced that they should sell,” said a currency dealer, asking not to be named.
The market had expected the Central Bank to allow the rupee to depreciate further, in line with other regional currencies that have declined against the dollar.