COLOMBO, March 27 Sri Lankan shares fell to a
more than one-year closing low on Monday in dull trade as
investors sold shares of lenders after the central bank
tightened monetary policy in the previous session, dealers said.
On Friday, the central bank raised its benchmark interest
rates by 25 basis points for the first time in eight months to
contain high inflationary expectations and a possible
acceleration of demand side inflationary pressures.
The Colombo stock index closed 0.36 percent weaker at
5,974.94, its lowest close since March 15, 2016. The index broke
below a key psychological barrier of 6,000 on Wednesday.
"Margins (calls) are still affecting the market. Buying
interest still hasn't come back into the market," said Dimantha
Mathew, head of research, First Capital Equities (Pvt) Ltd.
"Investors took the rate hike as a positive as it will give
some kind of stability in the economy and the hike was less than
what they expected. But investors are still waiting for the
market to bottom out to get in."
Turnover stood at 429 million rupees ($12.7 million), less
than this year's daily average of 688.4 million rupees.
The index had lost 2.18 percent since March 7 after the IMF
called for monetary policy tightening if credit growth or
inflation do not abate.
The bourse fell to "oversold" territory from "neutral", with
the 14-day relative strength index dropping to 27.488 points
versus Friday's 30.480, Thomson Reuters data showed. A level
between 30 and 70 indicates the market is neutral.
Foreign investors net bought shares worth 76.3 million
rupees on Monday, raising the year-to-date net foreign inflow to
3.89 billion rupees in equities.
Shares in Melstacorp Plc fell 3.06 percent while
the biggest listed lender Commercial Bank of Ceylon Plc
fell 1.59 percent.
($1 = 151.4000 Sri Lankan rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas