Bourse off to a strong start in 2014

Friday, 3 January 2014 04:32 - - {{hitsCtrl.values.hits}}

REUTERS: The Bourse rose for a fifth straight session to an 11-week high on Thursday as investors bought banking shares after the Central Bank cut its standing lending facility rate by 50 basis point to a multi-year low. Before the market opened for trading, the Central Bank slashed the standing lending facility rate or reverse repurchase rate by 50 basis points to 8.00%, in a move to reduce commercial banks’ interest rate spreads. The main stock index gained 0.93%, or 55.26 points, to 5,968.04, its highest close since 17 October. Revealing the 2014 financial and monetary policies, Central Bank Governor Ajith Nivard Cabraal said Sri Lanka’s economy is expected to grow 7.8% this year, with an inflation target of between 4-6% in a lower interest rate regime. “Rate cut and the positive outlook on the road map helped the market,” said a stockbroker on condition of anonymity. The index is now in an overbought region as its 14-day relative strength index hit 76.053, above the upper neutral level of 70, and higher than Tuesday’s close of 69.332, Thomson Reuters data showed. The stock market was closed for a special holiday on Wednesday. The index gained 4.8% in 2013, snapping losses in the previous two years, giving a return of 2.18% in dollar terms. Many investors locked their funds in risk-free debentures instead of risky assets due to a sluggish bourse amid falling interest rates. Foreign investors were net sellers for the first time in seven sessions. They sold Rs. 350 million ($ 2.68 million) worth shares on Thursday after buying a net Rs. 22.88 billion worth of stocks last year, compared to a record Rs. 38.68 billion net foreign inflow in 2011. The day’s turnover was Rs. 944.1 million, well above last year’s daily average of around Rs. 828.4 million.

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