Sri Lankan shares recover from 18-month low on bargain hunting
Sri Lankan share index recovered on Wednesday after hitting over 18-month lows in the previous session, as investors picked up battered banking and telecommunications shares, brokers said.
The bourse had lost 5.22 percent so far this year through Tuesday’s close on concerns over investors shifting to risk-free assets such as government securities due to rising yields amid global worries.
The main stock index ended up 0.31 percent, or 20.02 points, at 6,554.37, edging up from the lowest close since July 7, 2014 hit on Tuesday. The index had fallen in the last seven consecutive sessions.
“We were expecting this after massive fall as investors picked up some battered big cap shares. But the market might further come down especially with continued foreign selling due to global concerns,” said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd.
The index however was still in an oversold territory with the 14-day relative strength index at 20.874 points on Wednesday, edging up from Tuesday’s 17.311 points, Reuters data showed. A level between 30 and 70 indicates the market is neutral.
The turnover was at 926.04 million rupees ($6.44 million).
Foreign investors were net sellers of 312.1 million rupees worth of equities on Wednesday extending the year to date net foreign outflow to 2.26 billion rupees, compared with 4.43 billion rupees of outflow in 2015.
Analysts said local investors are worried of more monetary tightening after the central bank raised commercial banks’ statutory reserve ratio by 150 basis points with effect from Jan. 16.
Following the central bank’s move, the yield on 91-day t-bill rose 19 basis points to an over three-month high of 6.78 percent at a weekly auction on Tuesday.
Shares in conglomerate John Keells Holdings Plc rose 1.02 percent, while Dialog Axiata Plc jumped 2.00 percent and Sri Lanka Telecom Plc advanced 1.83 percent, pushing the overall index up. ($1 = 143.8000 Sri Lankan rupees)
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