Stock market gains to near 7-week high

Tuesday, 9 January 2018 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Shares rose on Monday to a near seven-week high as blue chip shares such as John Keells Holdings Plc gained, while foreign investors continued to buy the island nation’s risky assets.

The Colombo Stock Index ended 0.4% firmer at 6,540.51, its highest close since 10 November.

The Bourse rose 2.3% last week, in its second straight weekly gain.

Foreign buying accounted for 61.2% of the day’s turnover of Rs. 1.7 billion.

Foreign investors net bought shares worth Rs. 33.9 million ($ 220,559.53) on Monday, extending the net foreign inflow in this year to Rs. 2 billion.

They had net bought Rs. 18.5 billion worth of equities in 2017 and Rs. 633.5 million in 2016.

“The buying interest is continuing as investors are quite bullish,” said Dimantha Mathew, head of research at First Capital Holdings.

“There was a lot of foreign trading and investors are buying blue chip shares like John Keells. We expect the market to settle at 6,600 levels and there could be some profit-taking at those levels.”

Shares in conglomerate John Keells Holdings Plc rose 3.1%, Nestle Lanka Plc gained 3.5% and Lion Brewery Plc climbed 4.6%.

Analysts said the positive trend will continue due to declining market interest rates. Treasury bill rates fell 188 basis points to 216 basis points between March and end-December 2017, mainly driven by foreign buying in treasury bonds, resulting in declining market interest rates.

The country’s 2018 economic growth trajectory is likely to help boost market sentiment, analysts said.

Sri Lanka’s economic growth in 2018 is forecast at 5-5.5%, against an anticipated four-year low of less than 4% last year, Central Bank Governor Indrajit Coomaraswamy said on Wednesday.

The Central Bank kept its benchmark interest rates unchanged last week, saying inflation and private sector credit growth have cooled to manageable levels as policymakers focus on supporting a slowing economy.