Reuters: Sri Lankan shares fell more than 1.2 percent to close at its lowest in nearly two years in thin trade on Tuesday after Fitch Ratings downgraded the country's rating, while rising market interest rates also dampened market sentiment.
On Monday, Fitch downgraded Sri Lanka's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to B-plus from BB-minus on increasing refinancing risks, significant debt maturities, and weaker public finances.
Sri Lanka's benchmark share index closed 1.27 percent lower, or down 78.41 points at 6,113.40, the lowest close since April 11, 2014.
"It's a horrible day. Today market dipped mainly because of the Fitch downgrading," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd.
"Rating of a country is one key area investors are looking for. When it's downgraded, it's going to impact."
Investors are waiting for the country's negotiations with the IMF for a loan to progress in order to gauge the direction of the market, analysts said.
Sri Lanka is in initial talks with the IMF about a loan amid concerns over pressures on its balance of payments, outflows from government bonds and a ballooning fiscal deficit.
The index remained in the oversold territory for the sixth straight session, with the 14-day relative strength index at 21.663, Thomson Reuters data showed.
A level between 70 and 30 indicates the market is neutral.
The 182-day and 364-day t-bill yields rose 50 to 55 basis points last week to a more than two-year high, after the central bank raised key policy rates by 50 basis points from record lows.
Turnover was 566.9 million rupees ($3.94 million) on Tuesday, below this year's daily average of 705.5 million rupees.
Foreign investors were net buyers for the third straight session, purchasing 14.5 million rupees worth of shares on Tuesday.
Shares in Ceylon Tobacco Company Plc fell 2.99 percent, while Bukit Darah Plc fell 6.27 percent and Carson Cumberbatch Plc fell 13.25 percent.
Conglomerate John Keells Holdings Plc fell 0.88 percent.
On Monday, Fitch downgraded Sri Lanka's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to B-plus from BB-minus on increasing refinancing risks, significant debt maturities, and weaker public finances.
Sri Lanka's benchmark share index closed 1.27 percent lower, or down 78.41 points at 6,113.40, the lowest close since April 11, 2014.
"It's a horrible day. Today market dipped mainly because of the Fitch downgrading," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd.
"Rating of a country is one key area investors are looking for. When it's downgraded, it's going to impact."
Investors are waiting for the country's negotiations with the IMF for a loan to progress in order to gauge the direction of the market, analysts said.
Sri Lanka is in initial talks with the IMF about a loan amid concerns over pressures on its balance of payments, outflows from government bonds and a ballooning fiscal deficit.
The index remained in the oversold territory for the sixth straight session, with the 14-day relative strength index at 21.663, Thomson Reuters data showed.
A level between 70 and 30 indicates the market is neutral.
The 182-day and 364-day t-bill yields rose 50 to 55 basis points last week to a more than two-year high, after the central bank raised key policy rates by 50 basis points from record lows.
Turnover was 566.9 million rupees ($3.94 million) on Tuesday, below this year's daily average of 705.5 million rupees.
Foreign investors were net buyers for the third straight session, purchasing 14.5 million rupees worth of shares on Tuesday.
Shares in Ceylon Tobacco Company Plc fell 2.99 percent, while Bukit Darah Plc fell 6.27 percent and Carson Cumberbatch Plc fell 13.25 percent.
Conglomerate John Keells Holdings Plc fell 0.88 percent.
($1 = 143.8000 Sri Lankan rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)
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