Shares close steady, political woes weigh

Reuters: Shares ended steady on Monday, hovering near their more than six-week closing high hit in the previous session, while investors waited for cues on the political front as Parliament started a two-day debate on proposed constitutional reforms.
Investors have been cautious due to political uncertainty as Prime Minister Ranil Wickremesinghe’s party does not have a majority in Parliament and President Maithripala Sirisena promised to dissolve the Parliament after the end of his 100-day program on 23 April.
The passage of reform measures, including establishing independent Police, Judiciary, and Election and Public Service Commissions, is seen as a test for President Maithripala Sirisena’s Government.
The main stock index ended 0.07%, or 4.66 points, weaker at 7,125.12, hovering near its highest close since 10 March hit on Friday. It has gained 3.25% since the Central Bank cut key rates on 15 April through Monday, while yields on T-Bills have fallen 37-48 basis points since then.
“Political stability is the main concern. Many (investors) are waiting to see the outcome of the debate and when the parliamentary elections will be,” said Reshan Wediwardana, Research Analyst at First Capital Equities.
The Parliament on Monday started the two-day debate on constitutional reforms.
Some analysts said the markets would stay volatile until Parliamentary elections are announced.
The market saw a net foreign inflow for the first time in four sessions. Foreign investors were net buyers of Rs. 149.3 million ($ 1.12 million) worth shares, extending the net foreign inflow so far this year to Rs. 3.78 billion.
Turnover was Rs. 670.3 million, compared with this year’s daily average of around Rs. 1.07 billion.
Analysts said the market could be dull until the perception on political uncertainty is addressed and many investors were in a wait-and-watch mode before the Parliamentary elections.
Shares of Ceylon Brewery Plc fell 5.44%, while DFCC Bank Plc DFCC.CM dropped 0.37%. Diversified conglomerate Hayleys gained 2.56%.
The index lost 6.6% last month, its biggest monthly drop since October 2012, as investors sold holdings to settle margin trades amid concerns about political stability and a rise in interest rates.

Rupee forwards steady, late importer dollar demand offsets early selling Reuters: Rupee forwards ended steady on Monday as late importer dollar demand from a State firm offset early selling of the greenback by exporters, while pressure on the local currency is seen persisting through the middle of this year on lower interest rates, dealers said. Actively traded one-month forwards ended at 134.80/90 per dollar, little changed from Friday’s close of 134.75/95. “There was importer dollar demand from a state company,” said a currency dealer asking not to be named. Two-week and one-week forwards were steady at 133.90/134.00 and 133.60/70 per dollar, respectively. The Central Bank through moral suasion prevented the spot rupee from dropping below 132.90/133.20, a limit it set in February. Central Bank officials were not available for comment. Currency dealers said political uncertainty has been weighing on investor confidence and putting pressure on the exchange rate after President Maithripala Sirisena’s 100-day program ended on Thursday. Sirisena, who promised to dissolve parliament after the end of his 100-day program on 23 April, addressed the nation on Thursday and sought support of all legislators to pass constitutional and electoral reforms. Parliament on Monday started a two-day debate on constitutional reforms, including establishing independent Police, Judiciary, and Election and Public Service Commissions.