(Reuters) - Sri Lankan shares snapped an 11-day losing streak on Tuesday, recovering from a six-week closing low hit in the previous session, led by illiquid shares with high turnover.
Stockbrokers, however, said rising interest rates would not allow a rally in the market.
The main stock index ended 0.09 percent, or 6.09 points firmer, at 7,057, edging up from its lowest close since Feb. 5 hit on Monday. It had lost 3.64 percent in the last 11 sessions through Monday.
The day's turnover stood at 2.42 billion rupees ($18.2 million), its highest since Feb. 10 and well above this year's daily average of 1.29 billion rupees.
Foreign investors were net buyers of 212.04 million rupees worth of shares, extending the year-to-date foreign inflow to 3.02 billion rupees.
"Investors are following a wait and see approach. They are holding on to portfolios until they see a clear picture on economy and policies," said Reshan Wediwardana, Research analyst at First Capital Equities (Pvt) Ltd.
Dealers said the market was closely monitoring interest rates amid heavy government borrowing. Sri Lanka's new government has borrowed around $1.2 billion since March 9, which economists have blamed on poor revenue and higher expenditure.
The heavy borrowing has resulted in a spike in market interest rates.
Yields on t-bills rose between 112 basis points and 124 basis points at two weekly auctions in the last two weeks through Wednesday, with the 91-day t-bill yield rising to a 14-month high of 7.10 percent.
Shares in Ceylinco Insurance Plc rose 9.93 percent, while leading fixed line telephone operator Sri Lanka Telecom Plc rose 1.10 percent.
Stockbrokers, however, said rising interest rates would not allow a rally in the market.
The main stock index ended 0.09 percent, or 6.09 points firmer, at 7,057, edging up from its lowest close since Feb. 5 hit on Monday. It had lost 3.64 percent in the last 11 sessions through Monday.
The day's turnover stood at 2.42 billion rupees ($18.2 million), its highest since Feb. 10 and well above this year's daily average of 1.29 billion rupees.
Foreign investors were net buyers of 212.04 million rupees worth of shares, extending the year-to-date foreign inflow to 3.02 billion rupees.
"Investors are following a wait and see approach. They are holding on to portfolios until they see a clear picture on economy and policies," said Reshan Wediwardana, Research analyst at First Capital Equities (Pvt) Ltd.
Dealers said the market was closely monitoring interest rates amid heavy government borrowing. Sri Lanka's new government has borrowed around $1.2 billion since March 9, which economists have blamed on poor revenue and higher expenditure.
The heavy borrowing has resulted in a spike in market interest rates.
Yields on t-bills rose between 112 basis points and 124 basis points at two weekly auctions in the last two weeks through Wednesday, with the 91-day t-bill yield rising to a 14-month high of 7.10 percent.
Shares in Ceylinco Insurance Plc rose 9.93 percent, while leading fixed line telephone operator Sri Lanka Telecom Plc rose 1.10 percent.
($1 = 132.9000 Sri Lankan rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)
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