Bourse slips from 1-week high; foreigners buy

Tuesday, 4 June 2013 01:03 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lankan shares slipped on Monday from their one-week high hit on Friday in thin trading, as retail investors booked profits in banking and hotel shares, but foreign buying in blue-chip companies helped an overbought market resist further fall.

The main stock index edged down 0.18%, or 11.38 points, to 6,451.68. It had closed at 6,463.06 on Friday, the highest since 23 May, Reuters data showed.

Foreign investors accounted for around 54% of the day’s turnover of Rs. 750.45 million ($ 5.93 million), which was below this year’s daily average of Rs. 1.05 billion. The Bourse saw a net foreign inflow of Rs. 342.3 million, extending year-to-date inflows to Rs. 14 billion.

“The market is running on foreign buying. We will see continuous foreign buying with a bit of corrections,” said a stockbroker, asking not to be named.

The market’s 14-day Relative Strength Index (RSI) was still in overbought territory, at 75.673 on Monday and has been above the upper neutral level of 70 since 16 April, Thomson Reuters data showed. Retail profit-taking pulled the banking index by 0.18% down, led by Commercial Bank of Ceylon which fell 1.05%.

Analysts, however, said falling interest rates helped investors to be still optimistic about the market.

The Central Bank unexpectedly cut its key monetary policy rates by 50 basis points on 10 May to boost economic growth in the face of subdued demand and the market interest rates have been falling since then.

The rupee ended weaker at 126.20/55 per dollar from Friday’s close of 126.45/50 on importer and bank demand for the greenback, dealers said.