Stock market up as banks gain on rate decision

Thursday, 29 September 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lankan stocks closed higher on Wednesday, hitting a more than three-week closing high, led by gains in banking stocks after the central bank held the key monetary policy rates steady.

The Central Bank’s widely expected decision earlier on Wednesday to hold the rates steady suggested that policy makers were keen to support a slowing economy even as they kept a tight leash on rampant credit growth.

Treasury bill yields fell for the second session at Wednesday’s auction. They fell between 16-33 basis points.

Analysts said they expected the stock index to rise this week due to the fall in the return on fixed income assets.

The bank has tightened policy three times since December.

The benchmark index of the Colombo Stock Exchange ended 0.45%, or 29.03 points, up at 6,512.32, its highest close since 6 September.

After four straight weekly losses, the index had posted a weekly gain of 0.10% last week.

“Investors are in a positive mood and sentiment is slowly improving with foreign buying,” said Dimantha Mathew, head of research at First Capital Equities Ltd.

“Holding rates is just another confidence booster at a time the market has had a turnaround.”

Foreign investors bought a net Rs. 73.2 million worth of shares on Wednesday. But they have been net sellers of Rs. 2.96 billion worth of equities so far this year.

Turnover stood at Rs. 1.05 billion, well above this year’s daily average of Rs. 754.7 million.

Shares in biggest listed lender Commercial Bank of Ceylon Plc rose 1.4% while conglomerate John Keells Holdings Plc rose 0.59%.

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