Stocks hit near 6-week high; rupee weakens

(Colombo) REUTERS: Sri Lankan stocks rose for the seventh straight session yesterday to hit a near six-week high as beverage and banking shares rallied. However, the rupee ended weaker.

The benchmark stock index ended 0.61 percent firmer at 5,870.09, its highest close since September 3. So far this year, the index has dropped 3.01 percent.

Meanwhile, the rupee was 0.14 percent weaker at 180.90/181.10 per dollar compared with Friday’s close of 180.65/75. The currency is up 0.93 percent so far this year.

Foreign investors were net sellers of risky assets as presidential poll campaigning began in the nation.

Foreign investors continued selling for the ninth straight session. They sold a net Rs.204 million worth of shares, extending the yearto-date net foreign outflow to Rs.3.95 billion of equities, according to index data.

One of the two presidential frontrunners, former wartime defence chief Gotabaya Rajapaksa, is possibly getting the broader support of other smaller parties after President Maithripala Sirisena’s centre-left Sri Lanka Freedom Party (SLFP) pledged its backing for his candidature in the election scheduled for November 16.

Rajapaksa started his campaign last week, while the other strong candidate Sajith Premadasa, the Housing Minister, who has the backing of most of 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.1.1 billion, well above this year’s daily average of about Rs.662 million. Last year’s daily average was Rs.834.0 million.

Foreign investors sold government securities on a net basis for the seventh time in eight weeks, they sold a net Rs.102.8 million worth of government securities in the week ended October 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 September 25 has shown a steady outflow.

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