Colombo stock market soars to 6-month high on diversified shares, retail buying

Friday, 19 April 2013 00:01 - - {{hitsCtrl.values.hits}}

Reuters: Shares hit a six-month high on Thursday, as investors bought diversified shares and retail investors came back after the Central Bank said there would be room for further monetary policy easing.

The Central Bank on Tuesday kept key monetary policy rates unchanged for a fourth straight month, as expected, but left the door open for easing later as inflation is expected to slow further.

The main stock index gained 0.4%, or 23.30 points, to 5,891.83, its highest close since 2 October 2012.

“Retail investors and margin traders are active as they see at least stabilisation of interest rates as a positive sign and (the Central Bank) will not increase the rates in the short term,” said a stockbroker, who asked not to be named.

Expectations of falling interest rates have boosted sentiment, after Treasury Secretary P.B. Jayasundera last week said Sri Lanka’s interest rates should fall in May-June as the borrowing needs of loss-making State energy companies recede.

The index has risen for the last six straight sessions since the Treasury Secretary’s comments. The turnover was at Rs. 800.8 million ($ 6.38 million) on Thursday, less than this year’s daily average of about Rs. 965.1 million.

Foreign investors were net buyers of Rs. 159.9 million worth of shares, extending the year-to-date net foreign inflow to Rs. 7.31 billion. Last year, the Bourse saw a net inflow of $ 303 million.

The rupee edged down for a third straight session to 125.72/78 to the dollar, from Wednesday’s close of 125.60/62, due to demand from importers for the greenback, said currency dealers.

The rupee has been on the rise since mid-March on inflows from remittances and exporter dollar sales ahead of the traditional New Year, which most Sri Lankans celebrated on 13 and 14 April.