Sri Lankan shares recover from over 20-mth closing low

Reuters: Sri Lankan shares rose more than 1.4 percent on Thursday led by heavyweight stocks, recovering some ground from its lowest close in more than 20 months in the previous session.

The market had fallen for the four previous sessions as some investors sold their holdings to settle margin calls and others switched to treasury bills amid rising debt yields, brokers said.

The main stock index closed up 88.53 points at 6,349.71.

"It was push-up on large cap shares after margin calls," said Danushka Samarasinghe, research head at Softlogic Stockbrokers in Colombo. "(But) I don't think this momentum is sustainable."

Sri Lankan stocks have fallen nearly 10 percent this year as foreign investors, unnerved by global concerns over China's economy, have cut their exposure.

The yield on one-year T-bills rose 32 basis points to a more than two-year high of 7.80 percent at a weekly auction on Wednesday. Analysts expect market interest rates to rise in tandem.

On Thursday the 14-day relative strength index rose to 24.173, still in oversold territory, versus Wednesday's 12.070, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral.

Foreign investors were net buyers of 251.2 million rupees ($1.75 million) of equities on Thursday. They have been net sellers of 2.11 billion rupees so far this year.

Stockbrokers said some foreign funds have started selling blue-chips, including market heavyweight John Keells Holdings and lender Commercial Bank of Ceylon.

On Thursday, conglomerate John Keells rose 0.32 percent and Commercial Bank of Ceylon gained 1.20 percent.

Daily turnover was 986.9 million rupees, the highest since Jan. 12, and more than this year's average of 870.8 million.

Shares in Lanka ORIX Leasing Company Plc rose 8.45 percent while Ceylon Cold Store Plc rose 6.55 percent.

($1 = 143.9500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; editing by John Stonestreet)

Sri Lanka 12-month gilt yield sharply up

ECONOMYNEXT - Sri Lanka's 12-month Treasuries yields rose 32 basis points to 7.80 percent at Wednesday's auction in one of the steepest one day gains seen in recent years, data from the state debt office showed.

The 6-month yield rose 13 basis points to 7.19 percent.

The cut-off rate in the 12-month bills are estimated to be around 8.0 percent.

The debt office sold 12 billion rupees in 6-month bills and 3.7 billion rupees in 12-month bills totalling 15.7 billion rupees. Three-month bills were not offered.

The central bank especially around June last year had bought large volumes of Treasury bills with printed money, injecting unsustainable demand into the economy and generating balance of payment pressure.

There are fears that despite the rate rise more money may be printed this week as well, negating any benefit of a rise in rates to the exchange rate.

The debt office offered 24 billion rupees of bills for auction this week. There are an estimated 32 billion rupees of bills maturing.

Since the first week of December 6-month yields have risen 89 basis points and 12-month auction yields have risen 94 basis points.

Analysts call Sri Lanka's standard practice of printing money until the exchange rate collapses and then allowing rates to move up as the 'rawulath ne kendath ne' strategy.

In 2015 the budget deteriorated with steep hike in state salaries and subsidies. The deficit in the 2016 budget is also high.

Sri Lankan shares fall for 4th session to over 20-mth closing low

Reuters: Sri Lankan shares fell for a fourth straight session on Wednesday to their lowest close in more than 20 months due to rising yields and as investors sold their holdings to settle margin trading, brokers said.

The main stock index erased early gains and closed 0.35 percent, or 22.06 points, weaker at 6,261.18, its lowest close since May 7, 2014.

The stock market had shed about 9.2 percent this year through Wednesday's close due to foreign outflows, triggered by global concerns over China's economy and rising market interest rates locally.

The yield on one-year t-bills rose 32 basis points to a more than two-year high of 7.80 percent at the weekly auction on Wednesday. Analysts expect market interest rates to rise in tandem with t-bill yields.

"The market could not sustain the morning buying interest. But the good sign is that the selling did not come in a big way," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

"It looks like the prices are attractive at these levels. So, it may consolidate at these levels."

The bourse dipped further into an over sold territory with the 14-day relative strength index at 12.070 points versus Tuesday's 12.533, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral.

Foreign investors were net sellers of 11.33 million rupees ($78,707.88) worth of equities, extending the year-to-date net foreign outflow to 2.36 billion rupees.

Stockbrokers said some foreign funds have already started selling blue-chips, including market heavyweight John Keells Holdings and lender Commercial Bank of Ceylon .

Turnover was 606.95 million rupees, the lowest since Jan. 8, and lower than this year's daily average of 861.2 million rupees.

John Keells shares fell 0.50 percent and Commercial Bank of Ceylon dropped 0.85 percent. 

($1 = 143.9500 Sri Lankan rupees) 

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