Sri Lanka stocks fell slightly in low volume trade on Wednesday as some foreign and local private investors pessimistic about the economy's progress sold select shares, brokers said.
The key Colombo all-share index fell 0.02 percent, or 0.30 points, to 1,448.19. The bourse has gained more than 36 percent so far this year from upbeat corporate earnings. "The country's economic fundamentals don't look good and the future is uncertain. Inflation is going up and interest rates are expected to rise, so investors are staying out," said one broker.
"General sentiment is poor, people are not willing to jump in and buy. Retail activity was poor today," the broker said. The central bank is expected to announce key policy repurchase and reverse repurchase rates next on Wednesday after its monthly monetary policy meeting.
The government 12-month treasury-bill interest rate has remained steady at 7.5 percent for three weeks in a row. But inflation has risen to 5.4 percent in September, this year as against 4.9 percent in August, which has made investors wary, according to brokers. The Central Bank has cut its economic growth target to 5.0-5.5 percent for 2004 due to a drought and high oil prices are also pressuring the government. Analysts have warned that the equity market would be one of the firsts to be hit by any rise in interest rates. Nawaloka Hospitals Ltd fell 0.83 percent to 30 rupees on foreign selling. The Finance Co Ltd fell 2.88 percent to 25.25 rupees. Nations Trust Bank Ltd fell 1.16 percent to 21.25 rupees, also on foreign selling.