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Sri Lankan shares fall on foreign selling amid political uncertainties


Sri Lankan shares fell on Tuesday to end near a 10-month low as foreign investors sold equities amid political instability and on worries of further interest rate hikes, brokers said.

While investors turned cautious after the government’s coalition partners decided to contest local polls separately, a rise in treasury bill yields last week also affected risk appetite, said analysts.

Yields on treasury bills rose 2-5 basis points at a weekly auction on Wednesday to a near five-month high after the central bank governor signalled reduced intervention to defend the rupee.

Rising interest rates, which move in tandem with T-bill yields, have been a cause for concern, brokers said.

The Colombo stock index ended 0.13 percent down at 6,132.68, near its 10-month closing low hit last week, its second straight weekly decline.

“Big chunk of today’s trade was foreign-to-foreign transaction. Other than that, there was no major activity as most of the investors are on the sidelines, awaiting direction,” said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd.

Turnover stood at 1.65 billion rupees ($10.99 million), the highest since Dec. 28.

Foreign trading accounted for 67 percent of the day’s turnover, as foreign investors net sold 20.77 million rupees ($138,374) worth of equities on Tuesday, extending the year-to-date net foreign outflow to 1.65 billion rupees worth of shares.

Shares in Colombo Cold Stores Plc fell 1 percent while Ceylon Tobacco Company Plc fell 0.33 percent.

($1 = 150.1000 Sri Lankan rupees)

(Reporting by Ranga Sirilal; Editing by Vyas Mohan)


The comments on this report are provided by the Capital Markets Research Unit of First Capital Holdings PLC an investment bank in Sri Lanka.

The company operates in the capital markets of Sri Lanka in government securities – treasury bills and bonds, stock brokering and share market investments, asset management, private wealth management,  retirement planning, personal financial planning, unit trust, margin trading, capital market research, trustee services, corporate finance advisory services including corporate debt structuring (debentures, trust certificates, commercial papers), valuations, restructuring, mergers and acquisitions, initial public offerings (IPOs) and project advisory.

The First Capital Group consists of First Capital Treasuries PLC, First Capital Limited, First Capital Markets Limited, First Capital Asset Management Limited and First Capital Equities (Private) Limited covering Colombo, Negombo, Matara, Kandy and Kurunegala.