Monday 20 April 2015

Sri Lankan shares slip on profit taking

(Reuters) - Sri Lankan shares slipped on Monday from their more than one-month closing high hit in the previous session, as investors booked profits after three straight sessions of gains, brokers said.

The main index slipped 0.09 percent, or 6.03 points, to 7,080.38, after closing at its highest since March 16 on Friday. It had gained 2.7 percent as of Friday since the central bank cut rate on Wednesday, while yields on government securities have fallen 30-50 basis points.

Stockbrokers said there was some profit-taking during the day with local investors mainly on the buying side.

The market saw a net foreign inflow of 184.9 million rupees ($1.39 million), extending the net foreign inflow so far this year to 3.58 billion rupees.

Turnover was 493.3 million rupees, the lowest since April 8 and less than a half of this year's daily average of around 1.1 billion rupees.

The market is dull due to political uncertainty and many are on a wait-and-see mode before the parliamentary elections, said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

Shares of Hatton National Bank Plc fell 1.39 percent, while conglomerate John Keells Holdings Plc fell 0.48 percent.

The index lost 6.6 percent last month, its biggest monthly drop since October 2012, as investors sold their holdings to settle margin trades amid concerns about political stability and a rise in interest rates.

Investors have been cautious due to political uncertainty as Prime Minister Ranil Wickremesinghe's party did not have a majority in parliament, stockbrokers said.

They said, however, efforts by both ruling and opposition parties for a stable government have helped to improve investor confidence, adding that investors were still largely on a wait-and-see mode ahead of parliamentary elections possibly in June.

($1 = 132.9000 Sri Lankan rupees) 


(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Cairn India pulling out of fuel, gas explorations in Sri Lanka

Since Cairn India is reportedly to pull out of its offshore fuel and natural gas explorations within the Mannar Basin in Sri Lankan waters, it has been revealed that the government has been compelled to look for new entities to continue drilling these deposits.

According to reports, with increasing pressure on Cairn India due to the fall of fuel prices in the world market, it has decided that the offshore fuel exploration in the Mannar Basin of Sri Lanka is not a priority.

The company has instead decided to further strengthen its oil production from its fields in Rajasthan in India.

According to reports, the Sri Lankan government has not abandoned its efforts of commercially exploiting the natural gas deposits discovered by Cairn India within the Mannar Basin, it has begun negotiations to attract other entities for this process.

It is still not clear how Cairn India is to recover it investments already made for these fuel explorations.

Cairn Lanka, which is a subsidiary of Cairn India has reportedly not renewed its fuel storage facilities it has obtained from the Colombo port and this confirms that it is to pull out of fuel and natural gas explorations in Sri Lanka.

On 05 March Cairn India announced that it was taking steps to cut its costs since fuel prices were falling rapidly in the world market.

It has been further revealed that Cairn India is to pull out of fuel and natural gas explorations in Sri Lanka from next October.

When Cairn India began fuel and natural gas explorations in Sri Lanka, it was owned by Cairn Energy PLC of Scotland and later acquired by Vedanta Resources of India in 2010. Hence, Cairn India is currently a subsidiary of Vedanta Resources.

In July 2008 Sri Lanka entered into an agreement with Cairn India for fuel and natural gas exploration in one block of the Mannar Basin.

The extent of this block is 3,400 square kilometres, the government had allowed Cairn India to drill to a depth of between 200 to 1,800 metres.

A Norwegian company, TGS-NOPEC Geophysical Company discovered fuel deposits off the coasts of Mannar and following this the Sri Lankan government divided this area into eight blocks.

Petroleum Resources Development Secretariat (PRDS) responsible for fuel explorations in Sri Lanka and which was under the purview of the President during the tenure of the former government has been brought under the Ministry of Power and Energy by the new government.

Hence, Sri Lanka’s the responsibilities of Sri Lanka’s fuel and gas explorations have now come under Minister Patali Champika Ranawaka.
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