Shares rebound on bargain hunting; rupee down

COLOMBO (Reuters) - Sri Lanka’s benchmark share index rose on Friday after four days of losses, as investors bargain-hunted after a long-awaited correction.

* Bourse up 0.93 pct; first rise in five days

* Rupee down from 22-mo high on short covering

Sri Lanka’s main share index rose 62.87 points to 6,833.61 from a two-week low. It is Asia’s best performer in 2010 with a 101.8 percent gain. The index fell 5.3 percent in the last four sessions through Thursday.

Banking and hotel shares led the climb after early losses. Shares in Aitken Spence Hotel Holdings gained 5 percent and Seylan Bank jumped 9.5 percent.

The index has dropped to a neutral region from an overbought zone with the 14-day relative strength index (RSI) on Friday was at 66.5, below the upper neutral limit of 70, Thomson Reuters data showed. The index was at 92.4 on 1 October. It is trading at the highest forward price-to-earnings ratio in Asia and global emerging markets at 20.8 times, compared with 13.2 for all of Asia and 12.2 for global emerging markets, Thomson Reuters StarMine data showed.

Market turnover was 2.5 billion rupees ($22.3 million), more than four times the 2009 average. Foreign investors sold a net 300 million rupees in shares and they have overall sold 17.8 billion rupees’ worth this year.

The rupee closed weaker at 111.85/90 from its near 22-month high of 111.65/70 on dollar buying by banks for short covering amid importer demand for dollars, currency dealers said.