Sri Lanka stocks fall for third session ahead of policy rates decision

ECONOMYNEXT – Sri Lanka stocks fell 1.48 percent for the third session on Wednesday (13), a day ahead of the centra; bank’s policy rate decision, brokers said.

The Colombo benchmark All Share Price Index fell 142.87 points to close at 9,497.49.

The S&P SL20 index of more liquid stocks, fell 1.47 percent or 52.41 points to close at 3,516.98.

“Market was down on rising interest rates. Already the market has seen a significant increase in treasury bill rates,” a broker said.

“We have not seen any significant shift from the stock market to fixed assets. But fund managers expect a double digit interest rate in the short term t-bills and that might result in some investors shifting to fixed income assets.”

The central bank will announce the policy rates on Thursday under the new governor Ajith Nivard Cabraal and many analysts see at least a 50 basis point hike in the key policy rates as the central bank has allowed the treasury bill rates to rise, signaling such an increase.

However, yields in T-bills have already risen above policy rates, analysts say.

On Wednesday, after the market closed the central bank data showed the 3-month t-bill rate had jumped 89 basis points to 8.04 percent.

Sri Lanka’s withdrawal of price controls has resulted in many essentials including LP gas to raise the prices in line with global market prices to minimize the losses. Brokers said the move along with the possibility of the government allowing further fuel price hikes also helped to boost energy-related shares.

Foreign investors bought a net 18.4 million rupees’ worth of shares on Wednesday however, the market already has suffered a net foreign outflow of over 44.4 billion rupees so far this year.

The day’s turnover was 3.3 billion rupees, below this year’s average daily turnover of over 4 billion rupees.

The fall was led by LOLC Holdings, Expolanka Holdings and Commercial Leasing and Finance.

LOLC Holdings fell down 2.56 percent to close at 589.50 rupees a share.

Expolanka Holdings, the market heavyweight which has a significant export component in its business, fell 1.83 percent to close at 188.00 rupees a share.

Commercial Leasing and Finance fell 2.83 percent to close at 30.90 rupees a share.

The bourse saw 29 stocks gaining against 161 falling on Wednesday.

The most active Food, Beverage and Tobacco Industry fell 0.7 percent and Bank Industry fell 0.58 percent. (Colombo/Oct 13/2021)

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