Sri Lankan shares fall on technical correction, outflows
COLOMBO, June 18
COLOMBO, June 18 (Reuters) - Sri Lankan shares fell on Wednesday on a technical correction and foreign outflows, with investors selling blue-chips such as John Keells Holdings Plc after the central bank held the key policy rates steady, stockbrokers said.
Investors were expecting a rate cut at the central bank's policy review, said analysts.
The main stock index fell 0.42 percent or 26.80 points to 6,317.61, edging down from its highest close since June 6, 2013.
Before the market opened on Wednesday the central bank kept policy rates steady at multi-year lows for a fifth straight month as it expects lending to pick up in the second half of the year.
"It was a long awaited technical correction," Hussain Gani, the deputy CEO at Softlogic Securities said.
Other analysts said investors were expecting a rate cut, but the central bank's decision dented sentiment.
The bourse saw a net foreign selling on Wednesday for the first time in 13 sessions. Foreign investors sold 41.5 million rupees ($318,700) worth of shares on Wednesday. But they have been net buyers of 5.81 billion rupees so far this year.
The market has been on a rising trend since late February due to the continued foreign buying and expectation of an interest rate cut.
Dealers said investors were waiting to see the impact of weekend violence that killed at least three people and left 75 people seriously injured on the market and tourism sector.
The central bank has reduced its key policy rates to multi-year lows, but has not yet seen any improvement in credit and import growth. April private sector credit growth contracted 3.3 percent year-on-year, its worst performance since January 2010.
Turnover was 713.9 million rupees, less than this year's daily average of 1.01 billion rupees.
Shares of Conglomerate John Keells fell 2.36 percent to 227.10 rupees, while Nestle Lanka Plc declined 1.35 percent to 1,923.00 rupees. ($1 = 130.2000 Sri Lankan Rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)