Sri Lankan stocks .CSE closed flat on Thursday as retail investors, who bought expecting a rally fuelled by foreign inflows, dumped shares when foreign buying did not take off despite a $2.6 billion IMF loan approval.
The all-share index edged up 0.07 percent or 1.84 points to 2,511.85. It hit a near 14-month closing high on Monday.
"Still we see a lethargic market without much foreign buying," said Prashan Fernando, executive director at Acuity Stockbrokers.
Analysts say foreigners are waiting for a clear direction on exchange rate stability after the IMF loan and steps by the government to maintain a 7 percent fiscal deficit in 2009 as agreed with the IMF.
IMF approved the loan on Friday to help the country weather the global financial crisis and build up its low reserves, while rebuilding the north after a searing 25-year civil war.
Foreign funds sold 82.96 million rupees of shares on Thursday and bought 91.97 million rupees, leading to a net inflow of 9.01 million rupees, bourse data showed.
Retail investors sold large cap shares, bought last week on hopes of a post-loan market rally, in time to settle the transaction before the before the month-end, taking profits as expected foreign buying did not materialise, analysts said.
Market heavyweight Sri Lanka Telecom STLT.CM edged up 0.53 percent to 47.75 rupees a share, while shares in Hatton National Bank HNB.CM closed 1.6 percent weaker at 127.75 rupees.
Top conglomerate John Keells Holdings JKH.CM, which fell 0.18 percent to 138 rupees, posted a 22 percent drop in its net profit for the first quarter ended on June 30. [ID:nCOL428071}
The total turnover was at 510.7 million rupees ($4.44 million), more than the 2008 daily average of 464 million rupees.
The bourse is up 67.1 percent in 2009 and 31.6 percent higher since the government declared victory in the war on May 18.
The central bank on Wednesday said the first IMF tranche of $322.2 million has come on Tuesday.
The rupee LKR= was ended flat at 114.90/95 a dollar as a state bank, which the central bank uses to direct the market, bought the dollar at 114.90.
Nandalal Weerasinghe, the chief economist at the central bank, on Wednesday said the bank does not want the rupee to appreciate from the current level ‘right now’.
The central bank sold 1.7 billion worth 30-month T-bond at an auction on Thursday. [ID:nCOL533196]
Currency dealers said the central bank also sold 2.25 billion rupees worth 28-day T-bills at 10.09 percent, 1.8 billion rupees worth 28-day T-bills at 10.22 percent, and 1.4 billion rupees worth 35-day T-bills at 10.44 percent to mop up excess rupee liquidity in the market created by dollar buying.
Global investors have told Sri Lanka they would prefer the government to issue a 10-year bond if it decides to tap the international capital markets, the central bank said on Wednesday. [ID:nCOL482783]
Sri Lanka’s year-on-year consumer price inflation in July is expected to have risen from a record low due to an increase in fuel prices and post-war consumer demand, a Reuters survey showed. [ID:nCOL533409]
The interbank lending rate or call money rate CLIBOR edged up to 9.495 percent from Wednesday’s 9.430 percent.
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