Sri Lanka stocks edge up from near 7-year low on bargain hunting; rupee firmer

COLOMBO, May 16 (Reuters) – Sri Lankan shares rose on Thursday, snapping their 10-session losing streak to recover from its lowest close in nearly seven years as investors bought beaten down shares. ** The rupee edged higher for the second session after four straight days of losses, but traders said sectarian violence was still denting investor sentiment. Most investors have shied away from the market since the April 21 bombings that killed more than 250 people in coordinated attacks on churches and luxury hotels. Islamic State claimed responsibility. ** The International Monetary Fund (IMF) on Tuesday approved the disbursal of a $164 million tranche of a loan programme, bringing the total disbursed to more than $1.16 billion. ** Sri Lanka’s budget and current account deficits could widen more than forecast because of the Easter Sunday bombings but the island’s economy should still grow 3.5% this year, as previously expected, the IMF added on Thursday. ** Sri Lanka’s economic growth is expected to slump to its lowest in nearly two decades this year, a Reuters poll showed last week. Tourism, foreign investment and overall business activity have all dropped after the bombings. ** The benchmark stock index ended 1 % firmer on Thursday at 5,251.79, edging up from its lowest close since Aug. 30, 2012, which it hit on Wednesday. ** Turnover was 552.4 million rupees ($3.14 million), less than this year’s daily average of around 555.8 million rupees. Last year’s daily average was 834 million rupees. ** Foreign investors sold a net 358 million rupees worth of shares on Thursday, extending the year to date net foreign outflow to 4.7 billion rupees worth of equities. ** The rupee closed slightly firmer on dollar-selling by exporters and banks. ** The rupee gained 0.2% to close at 175.90/176.10 per dollar, compared with Wednesday’s close of 176.20/40, market sources said. ** Analysts expect the currency to weaken as money flows out of stocks and government securities. ** The rupee gained 0.6% last week and is up 3.8% for the year. Exporters had converted dollars as investor confidence stabilised after a $1 billion sovereign bond was repaid in mid-January. ** The rupee dropped 16% in 2018 and was one of the worst-performing currencies in Asia. ** Foreign investors sold a net 10.8 billion rupees worth of government securities in the week ended May 8, extending net foreign outflow to 20.8 billion rupees so far this year, central bank data showed. ** Investor sentiment was damaged at the end of last year when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. A court later ruled the move unconstitutional, but the political turmoil led to credit rating downgrades and an outflow of foreign funds. ** For a report on global markets, click ** For a report on major currencies, click ($1 = 175.9000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez, editing by Deepa Babington)

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