* Retail selling drags index; funds remain undecided
* Foreign outflow at 10.3 mln rupees
* Central bank sells around $30 mln to defend rupee
Sri Lanka's main share index fell below the psychological barrier of 6,000 points on Wednesday to a two-week low on retail investor selling while large investors remained on the sidelines awaiting credit guidance from the main regulator.
The rupee closed steady as the central bank spent around $30 million defending the currency. The island nation's central bank painted a positive outlook for the economy and stock market for 2012 on Tuesday, but the bourse maintained its sliding momentum as small investors cashed in amid continued inactivity by uncertain large funds and institutions.
Central Bank Governor Ajith Nivard Cabraal said the $59 billion economy would grow 8 percent this year with an average inflation of 5-6 percent and the bourse will see a net inflow of $500 million in 2012.
The main share index ended 1.04 percent or 62.90 points weaker at 5,972.75, its lowest since Dec. 22. It has lost 1.67 percent in the first three session of the year, the thirdworst performer in Asia.
The index lost 8.5 percent in 2011 and was Asia's 10th-best performer after being top in the region until June. It was Asia's best in 2009 and 2010. Analysts expect the index to gain 20-25 percent this year due to strong economic fundamentals. Volume was 18.1 million shares, lowest since Dec. 27. Turnover was 459.7 million Sri Lanka rupees ($4.04 million), far below last year's average of 2.3 billion rupees.
Foreign investors were net sellers of 10.3 million shares on Wednesday, extending the total offshore selling to 125.8 million rupees so far this year. Foreign investors sold a net 19.13 billion rupees worth shares last year, following a record 26.4 billion in 2010.
The market has been looking for an easing of credit limits imposed by the Securities and Exchange Commission (SEC), which along with the resignation of the regulator's head and deputy, and a 3 percent currency devaluation, have dampened the market.
Direction from the new SEC head on credit limits is expected early this month, brokers said. The rupee closed flat at 113.89/90 to the dollar for a 30th straight session since a 3 percent devaluation effective from Nov. 21, with the central bank selling around $30 million to defend it, dealers said.
On Tuesday, the central bank governor said the rupee can be "flexible" in future given pressure on the island nation's balance of payments and declining reserves, though he said the bank would not allow "volatile" moves.
The bank has spent some $770 million to keep the exchange rate steady since Nov. 21. It spent a net $1.36 billion in the first nine months of last year to keep depreciation pressure at bay.
* Foreign outflow at 10.3 mln rupees
* Central bank sells around $30 mln to defend rupee
Sri Lanka's main share index fell below the psychological barrier of 6,000 points on Wednesday to a two-week low on retail investor selling while large investors remained on the sidelines awaiting credit guidance from the main regulator.
The rupee closed steady as the central bank spent around $30 million defending the currency. The island nation's central bank painted a positive outlook for the economy and stock market for 2012 on Tuesday, but the bourse maintained its sliding momentum as small investors cashed in amid continued inactivity by uncertain large funds and institutions.
Central Bank Governor Ajith Nivard Cabraal said the $59 billion economy would grow 8 percent this year with an average inflation of 5-6 percent and the bourse will see a net inflow of $500 million in 2012.
The main share index ended 1.04 percent or 62.90 points weaker at 5,972.75, its lowest since Dec. 22. It has lost 1.67 percent in the first three session of the year, the thirdworst performer in Asia.
The index lost 8.5 percent in 2011 and was Asia's 10th-best performer after being top in the region until June. It was Asia's best in 2009 and 2010. Analysts expect the index to gain 20-25 percent this year due to strong economic fundamentals. Volume was 18.1 million shares, lowest since Dec. 27. Turnover was 459.7 million Sri Lanka rupees ($4.04 million), far below last year's average of 2.3 billion rupees.
Foreign investors were net sellers of 10.3 million shares on Wednesday, extending the total offshore selling to 125.8 million rupees so far this year. Foreign investors sold a net 19.13 billion rupees worth shares last year, following a record 26.4 billion in 2010.
The market has been looking for an easing of credit limits imposed by the Securities and Exchange Commission (SEC), which along with the resignation of the regulator's head and deputy, and a 3 percent currency devaluation, have dampened the market.
Direction from the new SEC head on credit limits is expected early this month, brokers said. The rupee closed flat at 113.89/90 to the dollar for a 30th straight session since a 3 percent devaluation effective from Nov. 21, with the central bank selling around $30 million to defend it, dealers said.
On Tuesday, the central bank governor said the rupee can be "flexible" in future given pressure on the island nation's balance of payments and declining reserves, though he said the bank would not allow "volatile" moves.
The bank has spent some $770 million to keep the exchange rate steady since Nov. 21. It spent a net $1.36 billion in the first nine months of last year to keep depreciation pressure at bay.
