September 28, 2011 / 1:40 PM / 8 years ago

Sri Lanka stx at 2-mo lows on credit woes

* Food, beverage stx lead fall; market near oversold

* Foreign investors net sellers of 175.3 mln rupees

* Rupee gains on inflows, cenbank cutting dlr band

COLOMBO, Sept 28 (Reuters) - Sri Lanka’s stock market fell to a two-month low on Wednesday in thin trading volumes on month-end settlements to meet margin debt calls and retail selling amid a liquidity shortage weighed on the bourse.

The island nation’s main share index closed 0.4 percent or 27.01 points weaker at 6,710.67, lowest close since July 28. It is still Asia’s best performer with a return of 1.13 percent on the year.

The bourse witnessed a foreign outflow of 175.3 million rupees on Wednesday, and thus far in 2011, offshore investors have sold 16.8 billion after a record 26.4 billion in 2010.

Sri Lanka’s beverage and telecommunication sectors pushed the market down with, with losers outperforming gainers by 124 to 81, Thomson Reuters data showed.

Wednesday’s total volume was 55.8 million, lowest since Sep. 23, against a five-day average of 96.8 million. The 30-day and 90-day average trading volumes were 158.3 million and 142.7 million. Last year’s daily average was 67.9 million.

The day’s turnover was 1.51 billion Sri Lanka rupees ($13.69 million), less than last year’s average of 2.4 billion and this year’s 2.7 billion.

The island nation’s Securities and Exchange Commission (SEC) on Wednesday said it will establish a capital market industry consultative committee to ensure more robust and inclusive capital market development, a day after the regulator said it took action against insider dealings.

The rupee gained to 110.18/20 a dollar from Tuesday’s close of 110.29/30 due to dollar inflows and the central bank reducing its dollar trading band by 10 cents to 109.70/110.20 from 109.80/110.30, dealers said.

The central bank mopped up 19.45 billion rupees from the market on Wednesday through a repo auction at 7.08 percent.

FACTORS TO WATCH:

- If the central bank can maintain a narrow dollar trading range

- How much the central bank buys in repo auctions

- Rupee depreciation due to heavy importer dollar demand

DATA

Colombo Stock Exchange:

Stock Market Volume (Shares)

Current Volume Average Volume 30 Days

Yield and Price of Sri Lanka’s sovereign bonds:

Maturing year Tenure amount Reuters yield

2012 5-yr $500 mln 4.101-3.631

2014 5-yr $500 mln 4.791-4.478

2020 10-yr $1,000 mln 6.7756-6.6231

2021 10-yr $1,000 mln 6.7430-6.5999

* For Sri Lankan treasury securities benchmarks and data, please click and

* For interbank lending rate or call money rate or

* For secondary market rates, please see <0#LKBMK=>. ($1 = 110.320 Sri Lanka Rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Bryson Hull)

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