REUTERS: Sri Lankan stocks fell to a more than one-month low yesterday, losing for a sixth consecutive session, as investors stayed on the sidelines amid rising interest rates and political uncertainty ahead of parliamentary elections.
The main stock index fell 0.66 percent, or 47.17 points, to 7,136.33, its lowest close since February 5, extending the fall to 2.48 percent in the last six sessions. “Local institutional and high-net-worth investors were fairly inactive in the market,” TKS Securities (Pvt.) Ltd said in a note to investors.
Analysts said investors were waiting for clarity on interest rates and on the political front.
The Central Bank removed a penalty rate of 5 percent on its repo rate with effect from March 2. The bank had imposed the penalty in September to discourage commercial banks from parking money with it at an interest rate of 6.5 percent.
The scrapping of the penalty resulted in a rise in T-bill yields of between 86 basis points and 91 basis points last Tuesday. The Central Bank plans to raise Rs.50 billion through government securities this week, it said on its website. Elections to Sri Lanka’s 225-member parliament are expected to be announced after April 23 and it is unclear whether the ruling coalition led by President Maithripala Sirisena would contest unitedly or go to the polls separately.
Political analysts expect a hung parliament if Sirisena’s coalition members contest separately in the polls.
Shares in Ceylon Tobacco Company PLC fell 1.93 percent, while Shalimar Estate declined 13.64 percent. Turnover was Rs.665.4 million, well below this year’s daily average of Rs.1.37 billion. Foreign investors were net buyers of Rs.214.6 million worth of shares, extending the year-to-date foreign inflow to Rs.2.37 billion.