Sri Lankan shares fall to near 5-wk closing low; foreign selling drops

COLOMBO Wed Feb 12, 2014 7:00am EST

COLOMBO Feb 12 (Reuters) - Sri Lankan shares fell to their lowest close in nearly five weeks on Wednesday in thin trading volume as investors sold large caps to book profit.

The market came under pressure even though foreign selling in the island nation's risky assets dropped sharply.

Foreign investors sold net 10.6 million rupees worth of shares on Wednesday, much less than the daily average 1.15 billion rupees ($8.79 million) in the past four sessions, Stock Exchange data showed.

The bourse witnessed a net foreign outflow of 4.62 billion rupees in the last five sessions through Wednesday.

The main stock index lost 0.47 percent, or 28.67 points, at 6,084.48, its lowest close since Jan. 10. It has lost 2.6 percent in the last seven sessions through Wednesday.

Analysts said the foreign selloff in emerging markets was the reason for the exit of some offshore funds with profits.

Market heavyweight Ceylon Tobacco Company fell 1.62 percent to 1,240 rupees.

The bourse has seen 3.23 billion rupees of foreign outflow so far in 2014, after enjoying a net inflow of 22.88 billion rupees last year.

Analysts say local investors are active in the market after interest rates on treasury bills eased to multi-year lows, making fixed-income assets unattractive.

The index, however, has risen 2.90 percent so far this year, following a 4.8 percent gain in 2013. It fell in the previous two years.

The day's turnover was 548.6 million rupees, less than this year's daily average of about 1.24 billion rupees. The market has witnessed an average 1.71 billion rupees in the seven straight sessions through Tuesday, which analysts attributed to active local investment funds and institutional investors.

Analysts said investors have been waiting for directions from December-quarter earnings and an upcoming UNHRC session in March where Sri Lanka is facing a US-sponsored resolution for alleged human rights violations.

Stockbrokers said investors will shrug off political risks from renewed pressure by the United States to bring a fresh resolution against Sri Lanka at the UNHRC meeting in March, because the market had been expecting the worst. ($1 = 130.8250 Sri Lanka rupees) (Reporting by Shihar Aneez and Ranga Sirilal; Editing by Subhranshu Sahu)