ECONOMYNEXT – Sri Lanka stocks closed 0.76 percent lower on thin volumes, and the rupee ended firmer against the US dollar amidst liquidity injections by the central bank to sterilise short money markets while gilt yields edged higher, market participants said.
Colombo's All Share index fell a sharp 0.76 percent, down 44.64 points to 5,817.54, and the S&P SL20 index of more liquid stocks fell 1.06 percent, down 31.94 points to 2,970.06.
Sri Lanka equities have declined 8.66 percent so far this year.
Market turnover was 177 million rupees with 73 stocks declining during the day against 58 that gained.
Ceylon Cold Stores (down 48.90 rupees to 800 rupees), Ceylinco Insurance (down 139.50 rupees to 1,860.50 rupees), HNB (down 6.70 rupees to 203.30 rupees) and Softlogic Holdings (down 1.60 rupees to 20.30 rupees) contributed to the benchmark index decline.
Net foreign selling was 46.1 million rupees, down from selling of 58.1 rupees the previous day.
Foreign selling in Ceylon Cold Stores was 48 million rupees, according to Asia Securities.
The Sri Lanka rupee closed firmer at 169.00/20 rupees against the US dollar in early spot market trading Monday, strengthening from Friday's 169.20/40 rupees closing.
The Sri Lanka rupee had gained marginally on Friday from 169.35/55 rupees against the US dollar the previous day amidst intervention and short liquidity in money markets.
The rupee traded at an intraday low of 169.35 rupees against the greenback on Monday, market participants said.
Overnight money markets were short by 46.24 billion rupees on Monday, down 11.42 billion rupees the previous day with Central Bank injecting 81.74 billion rupees during the day via term and overnight reverse repos including banks borrowing 21.39 billion rupees from the overnight window.
Market analysts said short money markets can help strengthen the currency in a soft-peg regime.
Gilt yields increased in early secondary market trading Monday.
A three-bond maturing in 2021 closed at 10.90/11.05 percent in two-way quotes, up from 10.92/11.00 percent the previous close.
A five-year bond maturing in 2023 edged higher to 11.15/25 percent, up from 11.03/12 percent last Friday. (COLOMBO, 01 October 2018)