(Reuters) - Sri Lankan stocks hit their highest closing in more than three years on Thursday, led by banking and telecommunications companies, as low interest rates and continued buying by foreign investors into risky assets buoyed sentiment while block deals boosted turnover.
The main stock index rose 0.5 percent, or 36 points, to 7,199.25, its highest close since June 10, 2011, boosting market capitalisation by 37.5 billion rupees ($287.91 million) to 3.04 trillion rupees.
"We saw a layer of foreign buying coming into the market which helped local sentiment also," said a stockbroker asking not to be named.
"If earnings support, the trend would continue as investors have little choices with low interest rates," he added.
Brokers said the market would continue its bull run with foreign buying, despite profit-taking in some counters by retail investors.
The index has gained nearly 21.76 percent so far this year.
The bourse has been in an overbought region since July. The Relative Strength Index, a momentum indicator tracked by chartists, was at 84.495 on Thursday, Thomson Reuters data showed.
Stocks are deemed "overbought" above the 70-mark, signalling a reversal in the near term.
Top fixed line telephone operator Sri Lanka Telecom Plc led gains with a rise of 3.6 percent, while Commercial Bank of Ceylon, the country's biggest listed lender by market capitalisation, rose 2.3 percent.
Softlogic Holdings Plc bought a 45 percent stake in departmental store Odel Plc for about 2.7 billion rupees from its founders, Softlogic Chairman Ashok Pathirage told Reuters.
Odel rose 2.3 percent, while Softlogic closed unchanged.
Exchange turnover was 5.59 billion rupees ($42.92 million), its highest since Aug. 19 and well above this year's daily average of 1.24 billion rupees.
Foreign investors were net buyers of shares worth 565 million rupees, extending the year-to-date net foreign inflows to 10.38 billion rupees.
($1 = 130.2500 Sri Lankan rupee)
The main stock index rose 0.5 percent, or 36 points, to 7,199.25, its highest close since June 10, 2011, boosting market capitalisation by 37.5 billion rupees ($287.91 million) to 3.04 trillion rupees.
"We saw a layer of foreign buying coming into the market which helped local sentiment also," said a stockbroker asking not to be named.
"If earnings support, the trend would continue as investors have little choices with low interest rates," he added.
Brokers said the market would continue its bull run with foreign buying, despite profit-taking in some counters by retail investors.
The index has gained nearly 21.76 percent so far this year.
The bourse has been in an overbought region since July. The Relative Strength Index, a momentum indicator tracked by chartists, was at 84.495 on Thursday, Thomson Reuters data showed.
Stocks are deemed "overbought" above the 70-mark, signalling a reversal in the near term.
Top fixed line telephone operator Sri Lanka Telecom Plc led gains with a rise of 3.6 percent, while Commercial Bank of Ceylon, the country's biggest listed lender by market capitalisation, rose 2.3 percent.
Softlogic Holdings Plc bought a 45 percent stake in departmental store Odel Plc for about 2.7 billion rupees from its founders, Softlogic Chairman Ashok Pathirage told Reuters.
Odel rose 2.3 percent, while Softlogic closed unchanged.
Exchange turnover was 5.59 billion rupees ($42.92 million), its highest since Aug. 19 and well above this year's daily average of 1.24 billion rupees.
Foreign investors were net buyers of shares worth 565 million rupees, extending the year-to-date net foreign inflows to 10.38 billion rupees.
($1 = 130.2500 Sri Lankan rupee)
(Reporting by Ranga Sirilal; Editing by Subhranshu Sahu)
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