Bourse gains for third session; lower rates help

Saturday, 18 April 2015 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The main stock index gained for a third straight session on Friday to a more-than-one-month closing high, on buying by local investors as lower interest rates dissuaded them from investing in risk-free Government bonds. Since the Central Bank cut the key policy rates by 50 basis points to record lows on Wednesday, yields on Government securities have fallen 30-50 basis points, dealers said. The main index gained 0.13% to 7,086.41, its highest close since 16 March. It has gained 2.7% since the Central Bank’s rate cut. Stockbrokers said there was some profit-taking during the day with local investors mainly on the buying side. The market saw a net foreign outflow Rs. 31.7 million ($238,525), but it has seen a net foreign inflow of Rs. 3.4 billion so far this year. The day’s turnover was Rs. 717.1 million, well below this year’s daily average of around Rs. 1.1 billion. Infrastructure firm Access Engineering jumped 6.7%, while Aitken Spence Hotel Holdings gained 5.1%, helping to boost the index. The index had lost 6.6% last month, its biggest monthly drop since October 2012, as investors sold their holdings to settle margin trades amid concerns about political stability and a rise in interest rates. Investors have been cautious due to political uncertainty as Prime Minister Ranil Wickremesinghe’s party did not have a majority in Parliament, stockbrokers said. They said, however, efforts by both ruling and Opposition parties for a stable government have helped to improve investor confidence, adding that investors were still largely on a wait-and-see mode ahead of Parliamentary elections possibly in June.

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