Stocks slip from near 6-week high on profittaking; rupee weakens

(COLOMBO) REUTERS: Sri Lankan stocks ended weaker yesterday, snapping a run of seven straight gaining sessions to slip from a near six-week high hit in the previous session as investors booked profits. The rupee currency ended weaker.

The benchmark stock index ended down 0.5 percent at 5,840.48, slipping from its highest close since Sept. 3. So far this year, the index has dropped 3.50 percent.

Meanwhile, the rupee was 0.49 percent weaker at 181.85/95 per dollar, compared with Monday’s close of 180.90/181.10. The currency is up 0.41 percent so far this year.

Foreign investors were net sellers of riskier assets as campaigning got underway in the country’s presidential election.

Foreign investors continued selling for the 10th straight session. They sold a net Rs.79.9 million worth of shares, extending the year-todate net foreign outflow to Rs.4.03 billion of equities, according to index data.

One of the two presidential frontrunners, former wartime defence chief Gotabaya Rajapaksa, has won the backing of President Maithripala Sirisena’s centreleft Sri Lanka Freedom Party (SLFP), in the election scheduled for Nov. 16.

Rajapaksa started his campaign last week, while the other candidate Sajith Premadasa, the Housing Minister who has strong backing among the rural poor, also kicked off his campaign in the previous week.

Sri Lanka’s Central Bank left its key rates unchanged on Friday after loosening policy earlier this year, although growth is likely to remain subdued as the economy faces rising global risks.

Equity market turnover was Rs.583.4 million (US$3.21 million), well above this year’s daily average of about Rs. 661.6 million. Last year’s daily average was Rs.834 million.

Foreign investors sold government securities on a net basis for the seventh time in eight weeks, selling a net Rs.102.8 million worth of government securities in the week ended Oct. 9.

Foreign outflows, which are one of the major reasons behind the rupee’s recent weakness, may not abate until after a parliamentary election in 2020, some analysts had said.

The Central Bank does not release foreign trade numbers on a daily basis, but weekly data in the past six weeks through Sept. 25 has shown a steady outflow.

Sri Lanka has seen a net foreign outflow of Rs.54.9 billion through Oct. 9, according to the Central Bank data.