COLOMBO Feb 6 Sri Lankan shares fell on Monday
to an over 10-month closing low, dragged down by beverage and
banking stocks, as investors awaited cues from the central
bank's monetary policy review on Tuesday.
The Colombo stock index ended 0.8 percent lower at
6,068.31, it's lowest close since March 30, 2016.
Margin calls are expected in the coming days, said an
analyst, as the bourse fell below the psychological 6,140-level
and the index fell sharply to end only marginally higher than
the lower band of the neutral territory.
The index, which had risen from an oversold region, has been
trading in the neutral territory since Jan. 10, with the 14-day
relative strength index dropping to 30.474 on Monday, Thomson
Reuters data showed. A level between 30 and 70 indicates the
market is neutral.
Sri Lankan stocks, which have been declining since October,
have been hurt by political uncertainty arising from a decision
by the ruling coalition parties to contest local polls
separately, and on worries over a rise in market interest rates
with yields on 91-day treasury bills hitting near four-year
highs last week.
Sri Lanka's central bank could raise its key policy rates in
coming months if it skips a chance to tighten next week, a
Reuters poll showed, underlining renewed pressure on the rupee
after the Federal Reserve's rate hike last month.
Monday's market turnover was 393.8 million rupees ($2.62
million), well below this year's daily average of 625.5 million
"Market seen in negative note ahead of the central bank rate
announcement as many investors expect a rate hike," said
Dimantha Mathew, head of research at First Capital Equities
"We may see some margin calls coming in as the index fell
below the psychological barrier."
Foreign investors, who have been net sellers of 1.29 billion
rupees worth of shares so far this year, net bought 241.3
million rupees worth of equities on Monday.
Shares of Nestle Lanka Plc fell 2.4 percent while
Dialog Axiata Plc fell 2.8 percent and Hatton National
Bank Plc fell 0.9 percent.
($1 = 150.2500 Sri Lankan rupees)
(Reporting by Ranga Sirilal; Editing by Amrutha Gayathri)