COLOMBO, March 15 (Reuters) - Sri Lankan shares fell for a seventh straight session on Wednesday to a near one-year closing low as expectations of a possible interest rate hike weighed on sentiment, after the International Monetary Fund urged the central bank to tighten monetary policy.
The Colombo stock index closed 0.2 percent lower at 6,032.16, its lowest close since March 29, 2016.
The index has lost 1.4 percent over the last seven sessions since the IMF urged Sri Lanka's central bank last week to be ready to tighten monetary policy if credit growth or inflation did not abate.
The central bank's second monetary policy review of the year is due on March 24.
"Market is down mainly because of the negative sentiment local investors have," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd. "We are also seeing some margin calls coming in."
Most of the investors stayed on the sidelines, resulting in a thin turnover, which stood at 239.9 million rupees ($1.6 million), about a third of this year's daily average of 674.9 million rupees.
The bourse on Wednesday slipped into oversold territory with the 14-day relative strength index at 28.701 points versus Tuesday's 30.958, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral.
Shares of Sri Lanka Telecom Plc closed down 2 percent. Biggest listed lender Commercial Bank of Ceylon Plc ended 0.7 percent weaker, while Seylan Bank Plc fell 0.2 percent.
Foreign investors net bought shares worth 60.97 million rupees in the 11th straight session of net-buying, raising the year-to-date net foreign inflow to 2.36 billion rupees in equities. ($1 = 151.6000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)