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Monday, March 28, 2011

Sri Lanka bourse down from near 1-week high; rupee steady

COLOMBO, March 28 (Reuters) - Sri Lankan stocks closed weaker on Monday in thin turnover from a one-week high on a sell-off and as woes over higher inflation due to instability in oil-producing regions weighed.

The island's main share index closed 0.42 percent, or 30.18 points, weaker at 7,210.09. It hit a record closing high of 7,811.82 on Feb 14.

Analysts said investor sentiment has turned negative on move by Sri Lanka's Securities and Exchange Commission to end credit transactions by end-June [ID:nSGE6AS0BD] and turmoil in oil-producing Middle Eastern and North African countries.

Foreign investors were net sellers of 78.7 million rupees worth of shares on Monday. They have sold a net 6.6 billion in 2011, after a record 26.4 billion in 2010.

O il retreated on monday with brent slipping to around $115. Brent crude for may lcoc1 fell 41 cents to $115.18 a barrel by 1028 gmt, about $5 from a 2-1/2-year high near $120 reached last month. U.s. Crude clc1 shed 63 cents to $104.77. [id: nl3e7es07y]

Sri Lanka imports all its oil, so the crises in Libya and the Middle East mean the island nation's economy could be hit by soaring inflation and a loss of earnings from Sri Lankan expatriate workers and lower tea demand from the region.

The day's turnover was 1.6 billion Sri Lanka rupees ($14.5 million), lower than last year's average of 2.4 billion rupees and well below this year's daily average of 3.3 billion.

The bourse is still Asia's best performer so far in 2011 with an 8.7 percent gain, after bringing in the region's best return of 96 percent last year.

Traded volume was 49.5 million, against a five-day average of 68.9 million shares. The 30-day and 90-day average trading volumes were 68.6 million and 69.5 million, respectively.

Last year's daily average volume was 67.9 million.

The bourse is trading at a forward price-to-earnings (P/E)ratio of 15, one of the highest among emerging markets, compared with 12.5 in Asian markets and 11.8 in global emerging markets, Thomson Reuters StarMine data showed.

The rupee closed steady for a fifth straight day at 110.38/40 a dollar, dealers said.

FACTORS TO WATCH:

- Impact on stocks and rupee due to ongoing Middle East/North Africa turmoil

- Impact of rising inflation on the bourse

- The extent of rupee appreciation the central bank will allow to curb imported inflation

source - in.reuters.com