(Reuters) - Sri Lankan stocks hit more than 33-month highs on Wednesday, as investors bought into the island nation's risky assets after yields in risk free treasury bills further fell after the central bank kept policy rates at multi-year lows.
Continued foreign buying also boosted sentiment.
The main stock index rose 0.22 percent, or 14.77 points, to 6,742.56, its highest close since Oct. 3, 2011.
Yields in treasury bills fell further at the Wednesday's weekly auction.
"Though we don't see a galloping market, it will be stable and positive," said Hussain Gani, deputy CEO at Softlogic Stockbrokers.
The central bank on Monday kept policy rates steady at multi-year lows for a sixth straight month, as expected, despite private sector credit growth slowing to a 4-1/2-year low.
The index is in the overbought region since July 3 as it has gained 5.71 percent so far this month, Thomson Reuters data showed.
Analysts said the profit-taking in the mid cap shares and penny stocks was overshadowed by the gains in large cap shares.
Turnover was 1.21 billion rupees ($16.82 million), more than this year's daily average of about 1.09 billion rupees. Foreign investors accounted for 37.4 percent of the day's turnover.
Foreign investors were net buyers of 326.3 million rupees worth of shares on Wednesday, extending net foreign inflows in stocks to 9.79 billion rupees so far this year.
Tuesday's gains were led by Carson Cumberbatch, which rose 2.27 percent to 460.20 rupees and Bukit Darah Plc , which gained 3.75 percent to 700 rupees.
Shares in the market heavyweight John Keells Holdings gained 1.03 percent to close at 244.90 rupees.
Lower interest rates have prompted local investors to buy shares and shift their savings from unattractive fixed assets, analysts said, as yields on treasury bills edged down further at a weekly auction on Wednesday.
Analysts said foreigners have been buying risky assets because they see value in them, while falling yields in fixed assets gradually prompt local investors to shift to equities.
The market has been on a rising trend since late February due to continued foreign buying and lower interest rates.
Continued foreign buying also boosted sentiment.
The main stock index rose 0.22 percent, or 14.77 points, to 6,742.56, its highest close since Oct. 3, 2011.
Yields in treasury bills fell further at the Wednesday's weekly auction.
"Though we don't see a galloping market, it will be stable and positive," said Hussain Gani, deputy CEO at Softlogic Stockbrokers.
The central bank on Monday kept policy rates steady at multi-year lows for a sixth straight month, as expected, despite private sector credit growth slowing to a 4-1/2-year low.
The index is in the overbought region since July 3 as it has gained 5.71 percent so far this month, Thomson Reuters data showed.
Analysts said the profit-taking in the mid cap shares and penny stocks was overshadowed by the gains in large cap shares.
Turnover was 1.21 billion rupees ($16.82 million), more than this year's daily average of about 1.09 billion rupees. Foreign investors accounted for 37.4 percent of the day's turnover.
Foreign investors were net buyers of 326.3 million rupees worth of shares on Wednesday, extending net foreign inflows in stocks to 9.79 billion rupees so far this year.
Tuesday's gains were led by Carson Cumberbatch, which rose 2.27 percent to 460.20 rupees and Bukit Darah Plc , which gained 3.75 percent to 700 rupees.
Shares in the market heavyweight John Keells Holdings gained 1.03 percent to close at 244.90 rupees.
Lower interest rates have prompted local investors to buy shares and shift their savings from unattractive fixed assets, analysts said, as yields on treasury bills edged down further at a weekly auction on Wednesday.
Analysts said foreigners have been buying risky assets because they see value in them, while falling yields in fixed assets gradually prompt local investors to shift to equities.
The market has been on a rising trend since late February due to continued foreign buying and lower interest rates.
($1 = 130.1800 Sri Lankan Rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)
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