CSE rebounds on retail, foreign buying

Thursday, 23 May 2013 00:35 - - {{hitsCtrl.values.hits}}

Reuters: Shares recovered on Wednesday on thin volume as retail investors bought mid caps, prompted by a fall in interest rates, while foreign investors preferred banking shares, dealers said.

The main stock index rose 0.31%, or 19.98 points, to close at 6,461.62. “It was retail driven,” said a stockbroker on condition of anonymity. Market turnover was Rs. 766.2 million ($ 6.06 million) on Wednesday, less than this year’s daily average of Rs. 1.05 billion.

Foreign investors were net buyers of shares worth of Rs. 308.4 million, extending net foreign inflows this year to Rs. 12.87 billion.

The market 14-day Relative Strength Index (RSI) was in over-bought territory of 86.114 on Wednesday and has been above the upper neutral level of 70 since 16 April, Thomson Reuters data showed.

“Retailers are thinking that the market is not over heated yet and they will take the market to a different level. We see the resistance level at 6,600 points,” the stockbroker said.

The Bourse has gained 3.57% since the Central Bank cut key policy rates by 50 basis points on 10 May, following some of its regional peers, to boost economic growth amid subdued demand.

A fall in interest rates of fixed income assets has helped boost sentiment in the share market as retail investors, who dominate the island nation’s bourse in terms of volume, shift to equities from Government securities.

The rupee ended steady at 126.25/30 in dull trade, currency dealers said.