(Reuters) - Sri Lankan stocks climbed to their highest close in more than three years on Thursday, led by banking and diversified shares as investors had little option other than buying into risky assets because of lower interest rates.
The main stock index ended up 0.79 percent, or 57.97 points, at 7,351.05, its highest close since June 6, 2011.
"Heavy interest in blue-chips pushed the market up. We feel the market has gone above the earning levels," said Dimantha Mathew, manager, research at First Capital Equities (pvt) Ltd.
Mathew said the market's gains could have an impact on earnings in the September quarter as the bourse is already overheated.
Analysts said local investors have no alternative but to buy stocks.
Though the central bank has kept interest rates unchanged since January, yield in the one-year t-bill has fallen around 260 basis points so far this year
The day's turnover was 2.46 billion rupees ($18.9 million), much above this year's daily average of over 1.33 billion rupees.
Foreign investors net bought 394.1 million rupees of shares on Thursday, extending net foreign inflows to 7.44 billion rupees so far this year.
Market heavyweight John Keells Holdings Plc, which led the market gain, rose 1.92 percent to 260.60 rupees, while DFCC Bank Plc gained 4.62 percent to 215.30 rupees.
The main stock index ended up 0.79 percent, or 57.97 points, at 7,351.05, its highest close since June 6, 2011.
"Heavy interest in blue-chips pushed the market up. We feel the market has gone above the earning levels," said Dimantha Mathew, manager, research at First Capital Equities (pvt) Ltd.
Mathew said the market's gains could have an impact on earnings in the September quarter as the bourse is already overheated.
Analysts said local investors have no alternative but to buy stocks.
Though the central bank has kept interest rates unchanged since January, yield in the one-year t-bill has fallen around 260 basis points so far this year
The day's turnover was 2.46 billion rupees ($18.9 million), much above this year's daily average of over 1.33 billion rupees.
Foreign investors net bought 394.1 million rupees of shares on Thursday, extending net foreign inflows to 7.44 billion rupees so far this year.
Market heavyweight John Keells Holdings Plc, which led the market gain, rose 1.92 percent to 260.60 rupees, while DFCC Bank Plc gained 4.62 percent to 215.30 rupees.
($1 = 130.5000 Sri Lankan rupee)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)
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