ECONOMYNEXT – Sri Lanka shares closed weaker on Thursday, bucking two session gaining streak, after the central bank kept the key monetary rates steady while investors and market expected some easing in the tight monetary policy stance as inflation has started to decelerate, brokers said.
The main All Share Price Index (ASPI) closed 1.78 percent or 145.72 points lower at 8,028.14 from its highest since November 15 hit in the previous session.
“Investors were disappointed with the central bank keeping rates unchanged. They expected it to be eased with tax hikes and the inflation coming down,’ a market analyst said.
The market had witnessed some year-end selling. Analysts said the market is heading toward a correction.
Analysts have said the market is moving into a bull-trap with short-lived buying and selling sentiments because investors are not confident in market sustainability.
In the past sessions, the index continued to fall on the speculation of a local debt restructuring although no proper decision has been taken so far.
Central bank governor said the market rates should eventually ease despite the fears of a domestic debt restructuring as inflation falls, increased liquidity in dollar markets, and the inter-bank liquidity improves.
State Minister for Finance Shehan Semasinghe told parliament during the budget debate on Wednesday that Sri Lanka will continue to pay its domestic loans and no local debt restructuring has been discussed.
The budget saw policies that will increase the cost of doing business across the board, but relieve the government from depending on excess money printing, analysts say.
The market witnessed a turnover of 1.45 billion rupees, less than half of this year’s daily average turnover of 3 billion rupees.
The market saw a foreign outflow of 47 million rupees, bucking an inflow trend in the last seven straight sessions.
The total net foreign inflow stood at 18.3 billion rupees so far for this year.
The more liquid index S&P SL20 closed 2.19 percent or 54.99 points lower at 2,458.58.
The ASPI has fallen 6.6 percent so far in November after losing 13.4 percent in October.
It has lost 34.3 percent year-to-date after being one of the world’s best stock markets with an 80 percent return last year when large volumes of money were printed.
Expolanka, dragged the market down, losing 4.9 percent to close at 140.5 rupees a share.
Lanka IOC fell 4.4 percent to close at 175.5 rupees, while Hayleys lost 5.3 percent to close at 68.1 rupees. (Colombo/Nov24/2022)