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Thursday, September 22, 2011

Global, local woes drag Sri Lanka stx down to 6-wk low

* Stx down on IMF comments, global woes, liquidity crunch

* Foreign investors net sellers of 610.6 mln rupees

* Rupee weaker on cbank raising dlr band, importer demand

COLOMBO, Sept 22 (Reuters) - Sri Lanka's stock market fell for a third session to a more-than six-week low on Thursday, following Asian peers on a gloomy global economic outlook, a local liquidity shortage and forced selling to meet margin debt reductions.

The island nation's main share index closed 0.45 percent or 30.50 points weaker at 6,762.38, its lowest since Aug. 9. It is still Asia's best performer with a return of 1.91 percent on the year.

The bourse witnessed a foreign outflow of 610.6 million rupees on Thursday, it's highest since Sept. 7, and thus far in 2011, offshore investors have sold 16.5 billion after a record 26.4 billion in 2010.

"Global and local centers brought the market down," said a stockbroker asking not to be named.

On Thursday global stocks were tumbling and drove investors into safer currencies and government bonds due to the grim outlook for the U.S. economy from the Federal Reserve and signs of a slowing in China and Germany.

Analysts said investors were concerned the International Monetary Fund had not set a time frame for a review of Sri Lanka's progress under a $2.6 billion loan, the precursor to disbursement of the programme's eighth tranche.

The oil palms and pharmaceuticals sectors pushed the market down with losers outperforming gainers by 135 to 73, Thomson Reuters data showed.

The day's turnover was 1.9 billion Sri Lanka rupees ($17.2 million), less than last year's average of 2.4 billion and this year's 2.7.

Thursday's total volume was 114.8 million, against a five-day average of 155.1 million. The 30-day and 90-day average trading volumes were 163.6 million and 143.1 million. Last year's daily average was 67.9 million.

The rupee closed weaker at 110.29/110.30 a dollar from Wednesday's close of 110.18/20 on severe importer dollar demand with the central bank raising the dollar trading band by 10 cents to 109.80/110.30 from 109.70/110.20, dealers said.

The central bank mopped up 22.37 billion rupees from the market on Thursday through a repo auction at 7.08 percent.

FACTORS TO WATCH:

- If the central bank can maintain a narrow dollar trading range

- How much the central bank buys in repo auctions

- Rupee depreciation due to heavy importer dollar demand

source - http://www.reuters.com/