Stock market closes at seven-month high on retail buying

Tuesday, 30 April 2013 00:46 - - {{hitsCtrl.values.hits}}

(Reuters): Shares closed at their highest level in seven months on Monday as retail investors bought select shares on hopes interest rates would fall by June, while the rupee edged up on dollar sales by banks.

The main stock index rose for a fourth straight session to close 0.09%, or 5.45 points, up at 5,967.62, its highest close since 29 September 2012. Shares have been rising on hopes of a fall in interest rates after Treasury Secretary P.B. Jayasundera and the Central Bank said official interest rates could ease in May and June.

The market has risen 3.3% since the Treasury Secretary’s comments on official interest rates.

The recent rally has pushed the index to an overbought region with the Relative Strength Index at 80.559 on Monday, above the upper neutral region of 70.

“With the expectation of rates coming down, a lot of retail activities are coming in with a bit of foreign participation,” said a stockbroker.

The turnover was Rs. 845.84 million ($ 6.67 million), lower than this year’s daily average of Rs. 965 million. Foreign investors were net buyers of Rs. 114.95 million worth shares, extending the net foreign inflow so far this year to Rs. 8.7 billion. Last year, the bourse saw a net inflow of $ 303 million.

The rupee ended slightly firmer at 126.65/85 per dollar from Friday’s close of 126.77/80, as state banks sold dollars, currency dealers said.