(Reuters) - Sri Lanka's main stock index gained for a third straight session on Friday to a more-than-one-month closing high, on buying by local investors as lower interest rates dissuaded them from investing in risk-free government bonds.
Since the central bank cut the key policy rates by 50 basis points to record lows on Wednesday, yields on government securities have fallen 30-50 basis points, dealers said.
The main index gained 0.13 percent to 7,086.41, its highest close since March 16. It has gained 2.7 percent since the central bank's rate cut.
Stockbrokers said there was some profit-taking during the day with local investors mainly on the buying side.
The market saw a net foreign outflow 31.7 million rupees ($238,525), but it has seen a net foreign inflow of 3.4 billion rupees so far this year.
The day's turnover was 717.1 million rupees, well below this year's daily average of around 1.1 billion rupees.
Infrastructure firm Access Engineering jumped 6.7 percent, while Aitken Spence Hotel Holdings gained 5.1 percent, helping to boost the index.
The index had lost 6.6 percent last month, its biggest monthly drop since October 2012, as investors sold their holdings to settle margin trades amid concerns about political stability and a rise in interest rates.
Investors have been cautious due to political uncertainty as Prime Minister Ranil Wickremesinghe's party did not have a majority in parliament, stockbrokers said.
They said, however, efforts by both ruling and opposition parties for a stable government have helped to improve investor confidence, adding that investors were still largely on a wait-and-see mode ahead of parliamentary elections possibly in June.
($1 = 132.9000 Sri Lankan rupees)
Since the central bank cut the key policy rates by 50 basis points to record lows on Wednesday, yields on government securities have fallen 30-50 basis points, dealers said.
The main index gained 0.13 percent to 7,086.41, its highest close since March 16. It has gained 2.7 percent since the central bank's rate cut.
Stockbrokers said there was some profit-taking during the day with local investors mainly on the buying side.
The market saw a net foreign outflow 31.7 million rupees ($238,525), but it has seen a net foreign inflow of 3.4 billion rupees so far this year.
The day's turnover was 717.1 million rupees, well below this year's daily average of around 1.1 billion rupees.
Infrastructure firm Access Engineering jumped 6.7 percent, while Aitken Spence Hotel Holdings gained 5.1 percent, helping to boost the index.
The index had lost 6.6 percent last month, its biggest monthly drop since October 2012, as investors sold their holdings to settle margin trades amid concerns about political stability and a rise in interest rates.
Investors have been cautious due to political uncertainty as Prime Minister Ranil Wickremesinghe's party did not have a majority in parliament, stockbrokers said.
They said, however, efforts by both ruling and opposition parties for a stable government have helped to improve investor confidence, adding that investors were still largely on a wait-and-see mode ahead of parliamentary elections possibly in June.
($1 = 132.9000 Sri Lankan rupees)
(Reporting by Shihar Aneez; Editing by Sunil Nair)
