Sri Lankan shares steady; seen falling after rate hike
COLOMBO, July 29 (Reuters) – Sri Lankan shares ended steady in thin trade on Friday, though cautious investors fear the gains would be short-lived, as the central bank’s surprise move to raise key policy rates will hurt market sentiment.
After market hours on Thursday, the central bank raised its key interest rates by 50 basis points each in a surprise move aimed at curbing stubbornly high credit growth that is adding to concern about inflationary pressures.
The benchmark Colombo stock index ended up 0.03 percent, or 1.72 points, at 6,393.87. The bourse lost 0.54 percent on the week to post its first weekly fall in four.
"It was retail participation today," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd. "We might see a staggered reaction to the rate hike after a couple of days."
Stockbrokers said the market is also waiting for an economic policy announcement from Prime Minister Ranil Wickremesinghe, scheduled next month.
Turnover stood at 446.9 million rupees ($3.06 million), less than this year’s daily average of around 725.3 million rupees.
Overseas investors were net sellers of 4.65 billion rupees worth of shares so far this year, but they were net buyers of 121.5 million rupees worth of shares on Friday.
Shares in Sri Lanka Telecom Plc rose 1.93 percent, while Carson Cumberbatch Plc climbed 2.04 percent, pushing the overall index up.
Conglomerate John Keells Holdings Plc, which posted a 9 percent growth in the June quarter, gained 0.57 percent.