COLOMBO, March 22 Sri Lankan shares fell on
Wednesday to a more than one-year closing low, breaching a key
psychological barrier of 6,000, as expectations of an interest
rate hike continued to drag down the market ahead of the central
bank's policy review.
The Colombo stock index closed down 0.7 percent at
5,996.65, its lowest close since March 15, 2016.
"The market came down mainly on margin calls," said Dimantha
Mathew, head of research, First Capital Equities (Pvt) Ltd.
"Investors are expecting a rate hike, so local investors are
on the sidelines and only foreign investors are active."
Sri Lanka's central bank could raise its key policy rates in
the coming months if it skips a chance to tighten at its second
monetary policy review of the year on Friday, a Reuters poll
showed, two weeks after the International Monetary Fund called
for further tightening.
Turnover was boosted by foreign-buying in conglomerate John
Keells Holdings PLC and stood at 1.05 billion rupees
($6.9 million), well above this year's daily average of 672
The index has lost 1.8 percent since March 7, when the IMF
called for monetary policy tightening if credit growth or
inflation do not abate.
The bourse dipped into oversold territory on Wednesday, with
the 14-day relative strength index at 26.758 points versus
Tuesday's 34.145, Thomson Reuters data showed. A level between
30 and 70 indicates the market is neutral.
Foreign investors net bought shares worth 414.6 million
rupees, raising the year-to-date net foreign inflow to 3.07
billion rupees in equities.
The treasury bill rates have risen between 33 to 77 basis
points since July 28, when the central bank last raised the key
Shares in John Keells fell 2.1 percent, while Asiri
Hospitals Plc dropped 3.8 percent and biggest listed
lender Commercial Bank of Ceylon Plc fell 0.9 percent.
($1 = 151.5000 Sri Lankan rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by