ECONOMYNEXT – Sri Lanka stocks closed weaker on Friday (06) for the second straight session to end its lowest in more than five weeks as investors took a wait and see approach amid dented sentiments following President Ranil Wickremesinghe’s comment on inflation, dealers said.
The main All Share Price Index (ASPI) fell 1.45 percent or 132.71 points to close at 9,049.52, its lowest since August 30.
President Wickrememsinghe said on Thursday, that they will impose deposit rate caps in a bid to bring down interest rates s inflation runs at 70 percent and price controls on consumer goods were also planned in another regressive move.
However, Central Bank Governor Nandalal Weerasinghe on Thursday said higher interest rates are needed to tame the inflation.
“It seems like investors are taking a waiting stand with the budget is coming in and taxes are to be implemented. The quarterly results of some companies will have some effects as well,” a market analyst said.
“However, this sentiment can be expected for some time. Even if the market recovers, it will still be a bit unclear whether there will be a bullish sentiment for sometime.”
The most liquid index S&P SL20 closed at 1.72 percent or 48.61 points lower at 2,771.83.
The market saw a turnover of 2.1 billion rupees, lower than this year’s average turnover of 3.2 billion rupees.
The bourse saw a net foreign inflow of 174.2 million rupees on Friday. The inflow so far this year is 15.5 billion rupees after 16.8 billion rupees of net offshore buying in the last 39 consecutive sessions amid positive sentiment over an IMF deal.
The market witnessed its highest monthly net foreign inflows into the stock market last month in more than 10 years as some foreigners converted their dividend payments into risky assets because they could not get dollars to repatriate due to the forex crisis.
The island nation’s 4 trillion rupees worth stock market saw 14.7 billion rupees ($40.8 million) net foreign inflow in September, its highest since March 2012.
The index has lost 26 percent so far this year after being one of the world’s best stock markets with an 80 percent return last year when large volumes of money were printed.
LOLC Holdings, leading the index drag, closed 4.3 percent lower at 419.8 rupees a share.
Sampath Bank fell 2.3 percent to 38.1 rupees a share while Expolanka closed 2.5 percent down at 165.00 rupees. (Colombo/Oct07/2022)