Sri Lankan stocks end marginally lower; weaker rupee weighs

Colombo stock market

Sri Lankan shares slipped for a fifth straight session on Monday and closed at their lowest in more than two months amid concerns that a weak rupee would hurt corporate earnings.

The main stock index ended 0.05 percent, or 3.50 points, lower at 7,104.37, its lowest close since July 15.

“The rupee weakness has already impacted the broader market without having any sectoral limitation,” said Danushka Samarasinghe, head of research at Softlogic Stockbrokers.

“Prices of imported consumer items will go up. But it will take some time. I do not see any significant price increase if the rupee remains at 140 levels. But if it falls to around 145 levels, the price increase also could dampen the consumer demand and earnings.”

The rupee fell 0.21 percent on Monday to end at 140.85/90 per dollar, not far from its record low of 140.98 hit last week, on importer dollar demand.

Turnover was 667.3 million rupees ($4.75 million), compared with the daily average of 1.12 billion rupees. The turnover has been about half of this year’s daily average since Aug. 31, stock exchange data showed.

Analysts said investors were waiting to see how the government would bridge the budget deficit and where the revenue would come from, in its November budget.

The weak rupee curbed investor risk appetite and rising market interest rates also hit sentiment, with t-bill yields at their highest level in more than five months at the last auction.

Foreign investors were net sellers of 4.8 million rupees worth of shares on Monday, extending the year-to-date net foreign outflow to 2.99 billion rupees.

Shares of Hemas Holdings Plc fell 2.71 percent, while Distilleries Company of Sri Lanka Plc dropped 1.26 percent and the country’s biggest listed lender, Commercial Bank of Ceylon Plc, declined 0.60 percent. ($1 = 140.5000 Sri Lankan rupees)