Shares fall after biggest rate hike in 3 years

Sri Lankan ‌shares closed lower on Tuesday, dragged by losses across sectors, after the ​country’s central bank stunned markets by raising its policy rate by an outsized 100 basis points, the biggest hike in three years.

The CSE All-Share index settled at 22,175.14, down 0.85% ‌.

The Central Bank of Sri Lanka on Tuesday raised the overnight policy rate to 8.75% from 7.75%, citing higher inflation and a depreciating rupee amid the war with Iran.

eChannelling PLC and Harischandra ⁠Mills PLC were the top percentage ‌losers on ‌the CSE All-Share ​index, falling 6.3% ‌and 5.6%, respectively.

Trading volume ‌on the index fell to 94.3 million shares from 106.1 million in the previous session.

The equity market’s ‌turnover rose to 4.93 billion Sri Lankan rupees ($15.26 million) ⁠from ⁠2.43 billion rupees in the previous session, according to exchange data.

Foreign investors were net sellers, offloading stocks worth 3.08 billion rupees, while domestic investors were net buyers, purchasing shares worth 4.88 billion rupees, the data showed.