Sri Lankan shares down on large-cap sale; rupee ends firmer

(Reuters) – Sri Lankan shares ended weaker on Tuesday falling for the second straight session, as investors sold large-cap shares two weeks ahead of presidential polls. ** Investor concerns were on the rise over the country’s two top presidential candidates’ election giveaway offers, that officials and a credit rating agency are warning would push the country deeper into debt. ** The International Monetary Fund approved the release of sixth tranche of a $1.5 billion loan programme for Sri Lanka, while urging authorities to show fiscal discipline as the island nation heads into the poll later this month. ** Sajith Premadasa, the housing minister and one of the two presidential front-runners, last week announced his election manifesto, which is seen by analysts as a “broader policy framework”. His close rival Gotabaya Rajapaksa has pledged a tax overhaul that would reduce tax rate to 8% from the current 15% and abolish many taxes. ** Many political analysts that Reuters spoke to have said the tight race between the two candidates was still on. ** The benchmark stock index ended 0.27% weaker at 5,993.66, further moving away from its highest close since Jan. 4. Last week, the index rose 1.6% in its fourth straight weekly gain, but is down 0.97% this year. ** Large-cap stocks were among the top losers, with Ceylon Tobacco Company Plc falling 2.8%. Ceylon Cold Stores Plc ended 2.4% down, while conglomerate John Keells Holdings Plc ended 0.65% lower. The biggest-listed lender, Commercial Bank of Ceylon Plc, dropped 1.01%. ** The rupee ended 0.67% firmer at 180.20/40 per dollar, compared with Monday’s close of 180.40/60. The currency is up 1.3% so far this year. ** Foreign investors were net sellers of riskier assets for the nine times in ten sessions on Tuesday.

** Equity market turnover was 1.96 billion rupees, three times this year’s daily average of about 679.6 million rupees. Last year’s daily average was 834 million rupees. ** Meanwhile, foreign investors bought government securities on a net basis for the second time in four weeks, buying a net 1.55 billion rupees worth of government securities in the week ended Oct. 30. ** Total foreign outflows from government securities through Oct.30 stood at 52.08 billion rupees, according to central bank data. ** Sri Lanka’s central bank left its key rates unchanged on Oct. 11 after loosening policy earlier this year, although growth is likely to remain subdued as the economy faces rising global risks.

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