Sri Lankan shares fell for a second straight session on Thursday to a more than one-year closing low as expectations of an interest rate hike continued to drag down the market ahead of the central bank's monetary policy review. The Colombo stock index closed down 0.3 percent at 5,979.85, its lowest close since March 15, 2016. The index breached a key psychological barrier of 6,000 in the previous session.
"There are no buyers as most of the local investors are on the sidelines awaiting the outcome of the policy review," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd. Turnover stood at 616.4 million rupees ($4.1 million), less than this year's daily average of 671 million rupees.
The index has lost 2.1 percent since March 7, when the IMF called for monetary policy tightening if credit growth or inflation do not abate. The bourse dipped further into oversold territory on Thursday, with the 14-day relative strength index at 24.614 points versus Wednesday's 26.758, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral. Foreign investors net bought shares worth 194 million rupees, raising the year-to-date net foreign inflow to 3.26 billion rupees in equities. Shares in Asian Hotel Properties Plc fell 2.9 percent, while Lanka ORIX Leasing Company Plc fell 0.8 percent.