Jan 17, 2017 (Reuters) – Sri Lankan stocks closed lower on Tuesday for a second straight session as investor sentiment took a hit on political uncertainty and as yields on short-term bonds rose.
The Colombo stock index ended 0.24 percent weaker at 6,186.52, stepping away from its highest close since Dec. 30 hit on Friday, when it gained after the European Commission proposed increased market access for Sri Lanka as a reform incentive.
“Rising interest rates and political uncertainty are really hurting the market,” said Reshan Kurukulasuriya, chief operating officer, Richard Pieris Securities (Pvt) Ltd.
“Market is stagnant with no major investment coming into the country.”
Investors are concerned over possible political uncertainty as the main coalition partners in government are contesting local polls, likely mid-year, separately, analysts said.
Yields on treasury bill auctions rose 9-19 basis points at a weekly auction last week to a four-month high after the central bank governor signalled reduced intervention to defend the rupee currency.
Turnover stood at 510.7 million rupees ($3.41 million) on Tuesday, with foreign investors buying a net 60.4 million rupees worth of equities. They have net sold 1.56 billion rupees worth of shares so far this year.
Shares in Commercial Leasing and Finance Plc fell 5.88 percent, while Carson Cumberbatch Plc lost 2.78 percent and Sri Lanka Telecom Plc slipped 1.37 percent.
Shares in biggest listed lender Commercial Bank of Ceylon Plc fell 0.29 percent.