* Rising oil prices raise inflationary concerns
* SEC-directed debt settlement hurts sentiment
* Rupee up on cenbank intervention despite importer dlr demand
COLOMBO, March 21 (Reuters) - Sri Lanka's stock market closed weaker on Monday on concern over rising oil prices and export reductions due to the turmoil as Western powers launched air strikes on Libya.
The island's main share index closed 0.4 percent or 28.61 points weaker at 7,156.33. It hit a record closing high of 7,811.82 on Feb 14.
Sri Lanka imports all its crude oil, so the crises in Libya and the Middle East mean the island nation's booming post-war economy could get hit by soaring imported inflation.
The crises could also cut earnings from Sri Lanka's main agricultural export, tea, which has a big market in the Middle East, and prompt a reduction in remittances from Sri Lankan workers there, which would hit its top foreign exchange source.
A March 31 deadline imposed by Sri Lanka's Securities and Exchange Commission on brokers to cut the debt levels of their clients by 50 percent has prompted continuous forced selling, which has weighed on market sentiment.
The day's turnover was 2.6 billion Sri Lanka rupees ($23.5 million), just above last year's average of 2.4 billion rupees and but less than this year's daily average of 3.3 billion.
Foreign investors were net sellers of 296.5 million rupees' worth of shares on Monday and have sold a net 4.8 billion in 2011, after selling a record net 26.4 billion in 2010.
The bourse is Asia's best performer so far in 2011 with a 7.8 percent gain, after bringing in the region's top return with 96 percent last year.
Traded share volume was 29 million, against a five-day average of 49.6 million. The 30-day and 90-day average trading volumes were 77.3 million and 69.1 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 14.8, one of the highest among emerging markets, compared with 12.8 in Asian markets and 11.3 in global emerging markets, Thomson Reuters StarMine data showed.
The rupee closed firmer at 110.40 a dollar from Friday's close of 110.40/50 as the central bank reduced its dollar trading band to 109.70/110.40, despite heavy importer dollar demand, 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
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