Bourse up for fifth session on foreign buying, low rates

Tuesday, 23 September 2014 01:21 - - {{hitsCtrl.values.hits}}

Reuters: Stocks gained for the fifth session on Monday to touch their highest in more than three years, led by banking and diversified stocks on bullish sentiment due to lower interest rates, higher foreign fund buying and positive economic outlook. Stockbrokers said they expect the index to gain further as the market sees a possible rate cut during the Central Bank’s monetary policy rate meeting next week. The announcement is scheduled for 0200 GMT on Tuesday. The main stock index ended up 0.3&, or 21.49 points, at 7,256.41, its highest closing level since 9 June 2011. “Market is on a bullish trend on diversified and banking sector counters with a lot of foreign and institutional buying,” said First Capital Equities Ltd. Manager Research Dimantha Mathew said.

Rupee falls to over one-week low on importer dollar demandReuters: The rupee fell on Monday to hit a more than one-week low as late importer dollar demand outpaced inward remittances and exporter greenback conversions, dealers said. The spot currency ended at 130.30/35 per dollar, its lowest since 12 September and weaker from Friday’s close of 130.28/30. “There was importer dollar demand. State banks also bought dollars at 130.30 for their import demand. We did not see Central Bank intervention,” said a currency dealer asking not to be named. Dealers expect the rupee to be steady at least until the 2015 budget announcement, scheduled for 7 November. “The weekend local poll results show a hiccup in the Government’s political stability. As long as investor confidence remains, we do not see any drastic fall in the currency,” the dealer added. Results of a weekend provincial poll showed President Mahinda Rajapaksa’s ruling coalition winning the election with a lower margin as Opposition parties gained ground. Moody’s Investors Service said on Monday that Sri Lanka’s currency swap agreement with China was a credit positive for the country because it would bolster external liquidity position and enhance trade flow between the two.

“There is a possibility of a rate cut while the recent fuel price cut will ease inflation further and the Government is also expecting improvement in the credit growth.” Yields on Treasury bills fell three to four basis points at a weekly auction on Wednesday and are below the Central Bank’s standing deposit facility rate or the rate at which the Central Bank mops up liquidity from commercial banks. The cut in energy prices on Tuesday has also enthused the market. Sri Lanka is aiming for a higher economic growth of 8.2% and a lower fiscal deficit target of 4.4% of Gross Domestic Product next year, a Government document showed on Thursday. The index has gained 22.72% so far this year. The Bourse has been in an overbought region since July. The Relative Strength Index, a momentum indicator tracked by chartists, rose to 85.259 on Monday compared with Friday’s 83.442, Thomson Reuters data showed. Shares in Hemas Holdings Plc, which led the overall gain in the index, rose 6.10% to Rs. 62.6, while Ceylon Theatres Plc jumped 6.19% to Rs. 169.90. Shares in Dialog Axiata Plc rose 1.8% to Rs. 11.30 and Hatton National Bank Plc added 2.27% to Rs. 180. The day’s turnover was Rs.1.95 billion ($ 15 million), more than this year’s daily average of over Rs. 1.27. Foreign investors were net buyers of Rs. 458 million worth of shares on Monday, extending their year-to-date net purchases of Rs. 11.56 billion.

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