Bourse soars to over 3 month high; turnover tops Rs. 1 b again

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REUTERS: Shares rose to a more than three-month high on Friday in high turnover as investors bought large caps as sentiment was boosted by low interest rates. A lower interest rate regime helped the market, with turnover hitting a three-week high, though foreign investors sold the island nation’s risky assets. The country’s main stock index rose 0.4%, or 24.77 points, to 6,248.44, its highest close since 29 January. The market gained 4.28% in April as some retail investors started buying risky assets in the face of low interest rates. “Investors are positive over the low interest rates,” said a stockbroker. Lower interest rates have helped the market gain in the past few weeks and we have seen activity across the board, stockbrokers said. Last week the Central Bank kept policy rates steady at multi-year lows. The day’s turnover was Rs. 1.31 billion ($ 10.03 million), its highest since 9 April and more than this year’s daily average of Rs. 961 million. Shares of Expolanka Holdings PLC rose 3.88% to Rs. 10.70, while Carson Cumberbatch PLC rose 8.03% to Rs. 405.10. Ceylon Tobacco Co advanced 0.98% to Rs. 1,110. Parliament last week approved two projects for luxury resorts, worth up to $ 1,250 million, by John Keells, that will include hotels and shopping malls, and another by Australian gaming tycoon James Packer’s Crown Ltd. Shares in Keells fell 0.42% to Rs. 237. Vallibel One, which ended up 4.71% at Rs. 20.00, got parliamentary approval on 24 April to invest $ 300 million in an integrated luxury tourist resort in the island nation’s proposed exclusive gaming zone. Offshore investors were net sellers of Rs. 217 million worth of stocks on Friday, extending the net foreign selling so far this year to Rs. 7.41 billion.

 Rupee weaker on importer dollar demand

Reuters: The rupee ended weaker on Friday due to light importer dollar demand in dull trade, but dealers expect the currency to be stable in the near term as private sector credit demand remained sluggish. The spot rupee ended at 130.60/65 per dollar, weaker from Wednesday’s close of 130.61/63. “We have seen light importer demand,” said a currency dealer. Both the stock and foreign exchange markets were closed on Thursday for May Day, a public and bank holiday. Lower credit demand from the private sector, even though key interest rates have been at multi-year lows since January, has surprised dealers. At an auction on Tuesday, the Central Bank rejected all bids for the benchmark 91-day Treasury bills with yields already at their lowest since January 2007, data showed. Last week, the Central Bank kept policy rates steady at multi-year lows. Private sector credit grew 4.4% year-on-year in February, the slowest since May 2010, latest data from the Central Bank showed. That compared with a growth of 5.2% in January this year and 13.3% in February 2013. The Central Bank, in its monetary policy statement last week, expressed confidence that private sector credit growth would rebound in the second quarter and push up the pace of economic expansion. Dealers expect the rupee to trade in a 130.60-130.70 range in the near future until credit growth picks up. The currency has been hovering between 130.55 and 130.70 since 3 March, Thomson Reuters data showed, with the Central Bank intervening to smoothen any sharp volatility.