(Reuters) - Sri Lankan shares rose to one-year closing highs on Friday, led by gains in banking shares on expectations of a further 50 basis points rate cut in the next week's central bank policy rates announcement, dealers said.
The main stock index rose 0.70 percent, or 43.86 points, to 6,337.22, its highest close since June 10, 2013.
"The market is broadly expecting a 50 basis point rate cut next week," a stockbroker said on condition on anonymity. "There has been a lot of expectations that there could be another rate cut. We see some debenture issues have been scheduled in the near future at a rate below the current market rates."
The central bank has reduced its key policy rates to multi-year lows, but has not yet seen any improvement in credit and import growth. March credit growth slowed to a four-year low of 4.3 percent year-on-year.
Central bank governor Ajith Nivard Cabraal told Reuters on May 30 that the central bank was creating room to cut interest rates further.
The central bank will announce its June monetary policy rates on June 18.
Continued foreign buying and expectations of interest rate cuts have boosted sentiment and the market has been on a rising trend since late February.
The bourse saw a net foreign inflow for the 11th straight session.
Foreign investors bought 176.9 million rupees ($1.36 million) worth of shares on Friday, extending the net inflow for the past 11 days to 3.71 billion rupees worth of shares. They have been net buyers of 5.55 billion rupees so far this year.
Turnover was 809.3 million rupees, below this year's daily average of 1.01 billion rupees.
Shares in fixed line telephone operator Sri Lanka Telecom Plc rose 2.35 percent to 48 rupees, leading the gains in the overall index.
Palm oil firm Bukit Darah Plc advanced 2.9 percent to 650 rupees.
Financial firm Orix Leasing Co Plc rose 4.01 percent to 90.80 rupees, while Commercial bank of Ceylon Plc rose 1.36 percent to 133.80 rupees.
The main stock index rose 0.70 percent, or 43.86 points, to 6,337.22, its highest close since June 10, 2013.
"The market is broadly expecting a 50 basis point rate cut next week," a stockbroker said on condition on anonymity. "There has been a lot of expectations that there could be another rate cut. We see some debenture issues have been scheduled in the near future at a rate below the current market rates."
The central bank has reduced its key policy rates to multi-year lows, but has not yet seen any improvement in credit and import growth. March credit growth slowed to a four-year low of 4.3 percent year-on-year.
Central bank governor Ajith Nivard Cabraal told Reuters on May 30 that the central bank was creating room to cut interest rates further.
The central bank will announce its June monetary policy rates on June 18.
Continued foreign buying and expectations of interest rate cuts have boosted sentiment and the market has been on a rising trend since late February.
The bourse saw a net foreign inflow for the 11th straight session.
Foreign investors bought 176.9 million rupees ($1.36 million) worth of shares on Friday, extending the net inflow for the past 11 days to 3.71 billion rupees worth of shares. They have been net buyers of 5.55 billion rupees so far this year.
Turnover was 809.3 million rupees, below this year's daily average of 1.01 billion rupees.
Shares in fixed line telephone operator Sri Lanka Telecom Plc rose 2.35 percent to 48 rupees, leading the gains in the overall index.
Palm oil firm Bukit Darah Plc advanced 2.9 percent to 650 rupees.
Financial firm Orix Leasing Co Plc rose 4.01 percent to 90.80 rupees, while Commercial bank of Ceylon Plc rose 1.36 percent to 133.80 rupees.
($1 = 130.2400 Sri Lankan Rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)
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