Stock market gains for 4th session on retail buying

Saturday, 9 April 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Shares rose for a fourth straight session on Friday to end at their highest close in eight weeks as retail investors bought beaten-down stocks.

However, continued foreign outflows on worries over macroeconomic stability weighed on sentiment, dealers said.

Foreign investors offloaded a net Rs. 56.6 million ($391,695.50) worth of equities, their seventh straight session of selling, and extending the year-to-date outflows to Rs. 3.3 billion.

The benchmark stock index ended 0.73% higher at 6,275.62, its highest close since 12 February.

“Mostly it is retail-driven. With the prime minister’s visit to China, we have seen some interest in manufacturing sector,” said First Capital Equities Ltd Head of Research Dimantha Mathew.

“With the interest rates and the economic uncertainties, we think this run is short-lived.”

Prime Minister Ranil Wickremesinghe is on a three-day visit to China.

China and Sri Lanka are both determined to push forward with a stalled port project in Colombo, a senior Chinese diplomat said on Thursday following a meeting between the premiers of the two countries.

Turnover was Rs. 764.9 million, just below this year’s daily average of Rs. 790.7 million.

Analysts, however, said investors are cautious about macroeconomic uncertainty after a rating downgrade and unclear capital gains tax.

Sri Lanka last week postponed a plan to reintroduce capital gains tax by six months after the move threatened to dent foreign investor sentiment.

Stockbrokers said the concern now is how the government is going to impose the tax, rather than the tax itself.

Higher market interest rates and higher borrowing by the island nation facing a balance-of-payments crisis have also weighed on investor appetite, dealers said.

Analysts and economists worry slower growth could reduce corporate earnings of some listed firms.

Shares of Carson Cumberbatch Plc jumped 3.09%, while the country’s biggest listed lender, Commercial Bank of Ceylon Plc, gained 1.59%.

The market will see subdued trade in the coming days due to the Sinhala-Tamil New Year on 13 and 14 April, traders said.