Market enjoys $ 17M net foreign inflow

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By 2017-02-16

By Paneetha Ameresekere

The money market enjoyed a net foreign inflow (NFI) of US$ 16.59 million (Rs 2,501 million) at yesterday's trading, but that couldn't prevent the money market from being short for the fourth consecutive market day yesterday.

Conversions are based on the administered benchmark 'spot' rate of
Rs 150.75 to the US dollar as Central Bank of Sri Lanka (CBSL) deals in 'spot'. Market's net shortfall yesterday was Rs 2,184 million. Meanwhile, CBSL retired Rs 106 million worth maturing Treasury (T) Bills which were in its holdings yesterday, thereby reducing part of its T Bill holdings for the fourth consecutive market day, yesterday. That helped to reduce Government of Sri Lanka's (GoSL's) interest cost on account of money printing by Rs 60.22 million (0.8%) to Rs 7,504.64 million, yesterday. The value of money printing, inclusive of related interest cost, at the end of the day's trading yesterday was Rs 211,810.45 million, equivalent to a negative 96.98 times of the day's money market's net, shortfall. That money printing value is also equivalent to a negative 9,798.28% of the market's net shortfall as at yesterday.

ER pressure mixed
Continued foreign selling in the government securities market (GSM) saw the exchange rate (ER) in the interbank foreign exchange market fall by 10 cents to Rs 151/60/75 in one month's forwards to the US dollar, while two weeks' forwards also fell by between five and 15 cents to close yesterday at Rs 151.35/45 in two way quotes to the dollar, market sources told this reporter.

On the previous day, one month's forwards closed at Rs 151.60/65 to the dollar in two way quotes, while that of two weeks' closed at Rs 151.30, they said. Volumes were moderate, sources said.
However, other sources said that there was foreign buying at the Rs 150.72 levels vis-à-vis investments in the GSM and the bourse. With Rs 0.03 being the bank's commission, where the buying banks are mandated to sell such proceeds to the CBSL at the controlled 'spot' rate of Rs 150.75 to the dollar. "There were quotes revolving round the spot rate, at Rs 150.75-Rs 150.85 due to foreign interests in the GSM and the bourse," they said, with trades ultimately executed at the Rs 150.72 levels in conformity with the administered 'spot' rate of Rs 150.75 to the dollar, sources said. 'Spot' trades are settled after two market days from the date of transaction.

Short for 4th day
With the money market being short for the fourth consecutive market day yesterday due to a dearth in inflows, upward pressure on rates in the weekly T-Bill auction continued for the ninth consecutive market week yesterday, with the weighted average yield (WAY) of the benchmark one year (364 day)
T-Bill rising by eight basis points (bps) to 10.55%, three months (91 day) by six bps to 9.22% and the six months (182 day) by five bps to 10.12%.

CBSL which administers GoSL debt, issued only Rs 21,752 million worth of
T-Bills to the market at yesterday's auction, marginally less than the original amount of Rs 22,500 million considered, in an attempt to bridle further upward pressure on rates.
Rs 21,752 million is equivalent to 96.68% of the original amount of Rs 22,500 million that had been previously earmarked for sale at yesterday's auction.

JKH dominates
A 'foreign to foreign' deal involving blue chip JKH, the market's largest capitalized stock, towards the end of the day's trading, yesterday, took turnover past the Rs 800 million mark in the bourse.
This deal, worth Rs 589.64 million, constituted 67.29% of the day's overall turnover of Rs 876.3 million. The number of shares that changed hands in this transaction comprised 3.98 million, representing 28.32% of yesterday's total share volume (SV) of 14.07 million. JKH's total contribution to yesterday's turnover was Rs 593.34 million on a SV of four million which was also the single biggest contribution by any stock at yesterday's trading. Nonetheless, JKH closed, down 1.27% to Rs 148 a share at the end of the day's trading. No other stock entered the Rs 100 million turnover club, yesterday.

Meanwhile, the stock market, buoyed by net foreign inflows (NFIs) coupled with overall improved quarterly results in the quarter ended 31 December, 2016, continued to make gains for the third consecutive market day, yesterday.
Yesterday, the bourse enjoyed a NFI of Rs 22.31 million, taking such consecutive inflows to the market, to 10 market days, thereby reducing net foreign outflows in the calendar year to date, to Rs 392.44 million. Number of gainers was 102 and losers, 52. Yesterday's NFIs were led by blue chip HNB, the market's seventh largest capitalized stock with Rs 24.62 million.
That resulted in the benchmark ASPI increasing by 0.43% to 6,175.50 points and the more sensitive S&P SL 20 Index by 0.37% to 3,545.91 points at the end of yesterday's trading.

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