Sri Lankan stocks fell for a third straight session on Thursday to a one-week low and turnover also fell a day after the International Monetary Fund warned of slower growth, high inflation, and lower tax revenue risks.

The main share index fell 0.03 percent, or 1.73 points, to end at 5,825.29, its lowest since Feb.7.

“Investors are worried about the IMF statement,” a stockbroker said on condition of anonymity. “The market is down on low liquidity. Investors are staying away awaiting for direction with high interest rates.”

Even though yields in T-bills fell for the 10th straight week at an auction on Wednesday, with the 364-day T-bill rate down to a near one-year low of 11.10 percent, lending rates have been more than 14.3 percent, central bank data showed.

The central bank said on Tuesday authorities had decided not to pursue a new loan from the IMF, which had said it may not be in a position to consider any direct or indirect budget support for Sri Lanka.

 Analysts and stockbrokers said there was a possibility interest rates would reverse the declining trend if the government resorts to expensive commercial borrowing to bridge the budget gap, after the expected IMF loan did not materialise.

The day’s turnover was 470.99 million rupees ($3.72 million), the lowest since Feb. 5, and less than this year’s daily average of 1.15 billion rupees.

Foreign investors were net buyers of 170 million rupees worth of shares on Thursday, but they have been net sellers of 929.31 million rupees this year.

The rupee ended weaker at 126.50/60 to the dollar from Wednesday’s close of 126.40/60 due to importer dollar demand, dealers said. (Reuters)

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