COLOMBO, Jan 23 (Reuters) – Sri Lankan stocks closed at their lowest in nearly two weeks on Monday led by diversified shares as concerns about rising interest rates and the ongoing political stability weighed on sentiment.
The Colombo stock index ended 0.12 percent down at 6,162.05, its lowest close since Jan. 10.
The index hit a two-week high on Jan. 13 after the European Commission proposed increased market access for Sri Lanka as a reform incentive.
"The uncertainty is still there and investors are still in wait-and-see mode as they are worried over the current uncertainty and interest rate volatility," said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd.
Foreign investors net sold 22.3 million rupees ($148,518.15) worth of equities on Monday, extending the year-to-date net foreign outflow to 1.38 billion rupees.
Turnover stood at 661.8 million rupees.
Shares in fixed-line telephone operator Sri Lanka Telecom Plc fell 0.28 percent, while market heavyweight John Keells Holdings fell 0.92 percent.
Rising market interest rates, which move in tandem with t-bill yields, have been a cause for concern, brokers said.
Yields on treasury bills rose 1-16 basis points at a weekly auction on Wednesday to a four-month high after the central bank governor signalled reduced intervention to defend the rupee.
Investors are also concerned about possible political uncertainty as the main coalition partners in the government are contesting local polls separately, analysts said.