March 4, 2016 / 12:14 PM / 2 years ago

Sri Lankan shares end weaker; rising rates weigh

COLOMBO, March 4 (Reuters) - Sri Lankan shares edged down for a fifth straight session on Friday to a near 2-yr low in thin trade as concerns over rising interest rates and a ratings downgrade pushed investors away from risk assets, traders said.

Sri Lanka’s benchmark share index closed 0.06 percent lower, or 3.50 points, at 6,057.22, the lowest close since April 7, 2014.

Its next support level is expected to be 5,800 points, analysts said.

“Declining trend is continuing with the selling pressure remaining. There are no buyers to take up the huge quantities which are to be sold,” said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

“Increasing interest rates and negative sentiment are continuing with the unclear policy outlook.”

On Wednesday, Fitch Ratings downgraded the ratings of some listed blue chip firms and strategic state firms. The ratings agency downgraded Sri Lanka’s sovereign rating to B-plus from BB-minus on Monday.

The index remained in oversold territory for the ninth straight session, with the 14-day relative strength index at 18.647 on Friday, compared with Thursday’s 18.840, Thomson Reuters data showed.

A level between 70 and 30 indicates the market is neutral.

Yields on treasury bills have risen between 54 and 105 basis points to a more than two-year high since the central bank raised the policy rates by 50 bps on Feb. 19.

Turnover stood at 334.4 million rupees ($2.32 million), less than half this year’s daily average of 708.2 million rupees.

Foreign investors were net buyers for the sixth straight session, purchasing 42.8 million rupees worth of shares.

Shares in Commercial Leasing & Finance Plc fell 5.13 percent, while Bukit Darah Plc dropped 2.64 percent. ($1 = 144.1500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

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