(Reuters) - Sri Lankan stocks hit their highest closing level in more than 32 months on Monday as lower interest rates forced investors across the board to buy risky assets, stockbrokers said, despite selling from foreign investors.
The gains were led by select shares such as Lion Brewery Plc and Dialog Axiata Plc.
The main stock index ended up 0.33 percent, or 21.49 points, at 6,499.00, its highest close since Oct. 14, 2011.
But foreign investors were net sellers for a second straight session on Monday, offloading 167.9 million rupees ($1.29 million) worth of shares on Monday. But they have been net buyers of 8.9 billion rupees so far this year.
"Investors are compelled to come to the market due to low interest rates. But they should be careful about where they invest," said a stockbroker asking not to be named.
Turnover was 1.35 billion rupees, more than this year's daily average of around 1.05 billion rupees.
Lion Brewery, an illiquid share, jumped 7.96 percent to 493.4 rupees a share, while Dialog Axiata rose 1.90 percent to 10.70 rupees.
John Keells Holdings rose 0.93 percent to 227.10 rupees.
Brokers said investors were bullish about the market after witnessing large state funds actively trading last week.
Analysts said foreigners have been buying risky assets because they see value in them, while falling yields in fixed assets is gradually prompting local investors to shift to equities.
They also say foreign buying could continue due to lower inflation after government data showed annual inflation eased to 2.8 percent in June, its lowest since February 2012, down from 3.2 percent a month earlier.
Yields on treasury bills edged down further at a weekly auction on Wednesday.
However, analysts said investors were concerned over the recent ethnic violence and possible implications of a government spokesman saying Sri Lanka bought Iranian crude via third parties.
The market has been on a rising trend since late February due to continued foreign buying and lower interest rates.
The gains were led by select shares such as Lion Brewery Plc and Dialog Axiata Plc.
The main stock index ended up 0.33 percent, or 21.49 points, at 6,499.00, its highest close since Oct. 14, 2011.
But foreign investors were net sellers for a second straight session on Monday, offloading 167.9 million rupees ($1.29 million) worth of shares on Monday. But they have been net buyers of 8.9 billion rupees so far this year.
"Investors are compelled to come to the market due to low interest rates. But they should be careful about where they invest," said a stockbroker asking not to be named.
Turnover was 1.35 billion rupees, more than this year's daily average of around 1.05 billion rupees.
Lion Brewery, an illiquid share, jumped 7.96 percent to 493.4 rupees a share, while Dialog Axiata rose 1.90 percent to 10.70 rupees.
John Keells Holdings rose 0.93 percent to 227.10 rupees.
Brokers said investors were bullish about the market after witnessing large state funds actively trading last week.
Analysts said foreigners have been buying risky assets because they see value in them, while falling yields in fixed assets is gradually prompting local investors to shift to equities.
They also say foreign buying could continue due to lower inflation after government data showed annual inflation eased to 2.8 percent in June, its lowest since February 2012, down from 3.2 percent a month earlier.
Yields on treasury bills edged down further at a weekly auction on Wednesday.
However, analysts said investors were concerned over the recent ethnic violence and possible implications of a government spokesman saying Sri Lanka bought Iranian crude via third parties.
The market has been on a rising trend since late February due to continued foreign buying and lower interest rates.
($1 = 130.2600 Sri Lankan Rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)
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