Sri Lankan shares fell on Monday to snap a two-session winning streak ahead of the central bank's monetary policy decision later in the day and as investors worried over volatile global markets and rising returns on risk-free assets. Six out of 11 analysts surveyed by Thomson Reuters expected the Central Bank of Sri Lanka to keep key policy rates steady, while the rest predicted a hike.
The main stock index ended 0.43 percent, or 27.41 points, lower at 6,354.83, after posting its highest close since January 14 hit on Friday.
The index has fallen 7.83 percent so far this year as foreign investors, unnerved by global concerns over China's economy, have cut their exposure.
Foreign investors were net sellers of 10.5 million rupees ($72,967.34) worth of equities on Monday, extending the year-to-date net foreign outflow to 2.28 billion rupees.
The yield on one-year t-bills rose 32 basis points to a more than two-year high of 7.80 percent at a weekly auction on Wednesday. Analysts expect market interest rates to rise in tandem.
Turnover was 374.1 million rupees on Monday, well below this years daily average of 821.7 million rupees.
Shares of Lanka ORIX Leasing Company Plc fell 1.91 percent, conglomerate John Keells Holdings Plc dropped 0.70 percent and Commercial Bank of Ceylon Plc, the country's biggest listed lender, declined 0.77 percent.
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