Foreign buying boosts Stock Market to over 7-week closing high

Reuters: Sri Lankan shares gained on Friday to a more than seven-week closing high on foreign buying, and as investors bought blue chips expecting better profits on hopes that the Central Bank’s rate hike would help improve the island nation’s macro-economic outlook.

Overseas investors were net buyers of 167 million rupees ($1.15 million) worth of shares on Friday, extending the net foreign inflow during the last eight sessions to 951.3 million rupees worth of equities.

However, they have been net sellers of 3.86 billion rupees worth of shares so far this year.

The benchmark Colombo stock index ended up 0.6%, or 38.88 points, at 6,517.13, its highest close since June 14.

“Market is up on renewed buying interest after yesterday’s consolidation,” Senior Research Analyst at First Capital Equities Ltd Atchuthan Srirangan said.

On Thursday, the bourse ended lower on profit-taking, snapping five days of gains.

“The good thing is there is not much of selling pressure in the market. We will see the market gaining with some consolidation in between,” Srirangan added.

Shares have risen on hopes that economic fundamentals would improve after the Central Bank last week raised its main interest rates by 50 basis points each in a surprise move aimed at curbing stubbornly high credit growth that is adding to concerns about inflationary pressures.

Stockbrokers said the market is waiting for an economic policy announcement from Prime Minister Ranil Wickremesinghe, scheduled later this month.

Turnover stood at 1.05 million rupees, more than this year’s daily average of around 734.1 million rupees.

Shares in conglomerate John Keells Holdings Plc rose 0.97% while Lanka ORIX Leasing Company PLC jumped 5.15%, pushing the overall index up.

Rupee ends up on foreign investors’ dollar sales

Reuters: The Sri Lankan rupee ended slightly firmer on Friday as foreign investors sold dollars to buy local shares, expecting better profits on hopes that the latest rate hike would help improve the island nation’s macro-economic outlook, dealers said.

The spot rupee ended at 145.55/65 per dollar, compared with Thursday’s close of 145.60/68, a dealer said.

“The importer demand was low and we have seen some foreign selling to buy stocks,” said a currency dealer, asking not to be named.

The spot rupee is usually managed by the Central Bank, and market participants use the forward market levels for guidance on the currency.

One-week rupee forwards ended little changed at 145.80/90 per dollar, compared with Thursday’s close of 145.80/88.

Last week, the Central Bank raised its main interest rates by 50 basis points each in a surprise move aimed at curbing stubbornly high credit growth that is adding to concerns about inflationary pressures.

Foreign investors, however, sold 768 million rupees ($5.28 million) worth of government securities in the week ended on Aug. 3.

However, they have bought 63.7 billion rupees worth of government securities, since the IMF agreed to a $1.5-billion bailout package, from April 29 through July 27, Central Bank data showed.