Bourse up to over 1-year high on banks, rate-cut hopes

Tuesday, 17 June 2014 01:56 -     - {{hitsCtrl.values.hits}}

Reuters: Shares rose for the second straight session on Tuesday to a one-year closing high, led by gains in banking stocks on hopes of a further 50 basis points rate cut in this week’s Central Bank policy rates announcement, stockbrokers said. The main stock index rose 0.11%, or 6.88 points, to 6,344.10, its highest close since 6 June 2013. Continued foreign buying and expectations of interest rate cuts have boosted sentiment and the market has been on a rising trend since late February. The Bourse saw a net foreign inflow for the 12th straight session. Foreign investors bought Rs. 198.7 million ($ 1.53 million) worth of shares on Monday, extending the net inflow for the past 12 days to Rs. 3.91 billion. They have been net buyers of Rs. 5.75 billion so far this year. Analysts said the market is broadly expecting a 50 basis point rate cut this week. “People are expecting a rate cut and they are pushing banking shares, expecting further cut,” a stockbroker said on condition of anonymity. The Central Bank has reduced its key policy rates to multi-year lows, but has not yet seen any improvement in credit and import growth. March credit growth slowed to a four-year low of 4.3% year-on-year. Central Bank Governor Ajith Nivard Cabraal told Reuters on 30 May that the Central Bank was creating room to cut interest rates further. The Central Bank will announce its June monetary policy rates on Wednesday. Turnover was Rs. 957.2 million, below this year’s daily average of Rs. 1.01 billion. Financial firm Orix Leasing Co Plc rose 0.44% to Rs. 91.20, while Commercial bank of Ceylon Plc rose 0.90% to Rs. 135. Palm oil firm Bukit Darah Plc advanced 0.55% to Rs. 653.60.