(Reuters) - Sri Lankan shares fell for a third straight session on Wednesday to a more than seven-month low as investors offloaded their holdings to settle margin trading while political uncertainty also weighed on sentiment.
The main stock index ended 0.36 percent, or 24.90 points, weaker at 6,973.03, its lowest close since Aug. 15 and further moving away from the key psychological support level of 7,000. It had lost 4.71 percent in the past 18 sessions.
"The fall is mainly due to margin calls and some big caps also came down on political uncertainty," said Reshan Wediwardana, a research analyst with First Capital Equities (Pvt) Ltd.
Analysts said concerns that the government's decision-making process would slow down, also weighed on sentiment after President Maithripala Sirisena formed a national government incorporating the main opposition party in a bid to push through reforms and preserve political stability.
The market also shrugged off a fall in t-bill yields, brokers said.
Yields on t-bills fell between 17 and 19 basis points at a weekly auction on Wednesday, after they dropped 31 to 44 bps last week.
The central bank said on March 18 that the low-interest rate environment was expected to continue benefiting from lower inflation while keeping policy rates steady.
Shares of the country's biggest listed lender, Commercial Bank of Ceylon Plc, fell 0.81 percent, while Ceylon Tobacco Company Plc dropped 2.32 percent.
The day's turnover was 2 billion rupees ($15.05 million), its highest since March 17 and more than this year's daily average of 1.21 billion rupees.
Foreign investors sold a net 5.59 million rupees worth of shares, but they have been net buyers of 3.33 billion rupees so far this year.
The main stock index ended 0.36 percent, or 24.90 points, weaker at 6,973.03, its lowest close since Aug. 15 and further moving away from the key psychological support level of 7,000. It had lost 4.71 percent in the past 18 sessions.
"The fall is mainly due to margin calls and some big caps also came down on political uncertainty," said Reshan Wediwardana, a research analyst with First Capital Equities (Pvt) Ltd.
Analysts said concerns that the government's decision-making process would slow down, also weighed on sentiment after President Maithripala Sirisena formed a national government incorporating the main opposition party in a bid to push through reforms and preserve political stability.
The market also shrugged off a fall in t-bill yields, brokers said.
Yields on t-bills fell between 17 and 19 basis points at a weekly auction on Wednesday, after they dropped 31 to 44 bps last week.
The central bank said on March 18 that the low-interest rate environment was expected to continue benefiting from lower inflation while keeping policy rates steady.
Shares of the country's biggest listed lender, Commercial Bank of Ceylon Plc, fell 0.81 percent, while Ceylon Tobacco Company Plc dropped 2.32 percent.
The day's turnover was 2 billion rupees ($15.05 million), its highest since March 17 and more than this year's daily average of 1.21 billion rupees.
Foreign investors sold a net 5.59 million rupees worth of shares, but they have been net buyers of 3.33 billion rupees so far this year.
($1 = 132.9000 Sri Lankan rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)
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