Oct 3 (Reuters) - Sri Lankan stocks hit 40-month highs on Friday, with turnover hitting a three-week high, led by a rally in banks and foreign buying in Dialog Axiata.
Gains were also supported by buying from local investors, who invested in risky assets because of lower interest rates.
The main stock index ended up 0.76 percent, or 55.55 points, at 7,406.60, its highest close since May 31, 2011.
"The market is bullish and we saw strong buying across the board. There was strong foreign and institutional interest. They are moving up and buying the quantities," said Dimantha Mathew, research manager, First Capital Equities (Pvt) Ltd.
Foreign investors bought a net 2.26 billion rupees of shares on Friday, extending net foreign inflows to 9.7 billion rupees so far this year.
Dialog Axiata Plc, which saw a net 137.6 million shares of foreign buying, rose 3.31 percent to 12.50 rupees.
Analysts said local investors have no alternative but to buy stocks. Though the central bank has kept interest rates unchanged since January, yield in the one-year t-bill has fallen around 260 basis points so far this year.
The day's turnover was at 4.39 billion rupees ($33.69 million), highest since Sept. 11 and more than three times this year's daily average of over 1.35 billion rupees.
Biggest listed lender by the market capitalisation, Commercial Bank of Ceylon Plc, which led the market gain, rose 3.44 percent to 165.50 rupees, while DFCC Bank Plc gained 7.48 percent to 231.40 rupees.
Gains were also supported by buying from local investors, who invested in risky assets because of lower interest rates.
The main stock index ended up 0.76 percent, or 55.55 points, at 7,406.60, its highest close since May 31, 2011.
"The market is bullish and we saw strong buying across the board. There was strong foreign and institutional interest. They are moving up and buying the quantities," said Dimantha Mathew, research manager, First Capital Equities (Pvt) Ltd.
Foreign investors bought a net 2.26 billion rupees of shares on Friday, extending net foreign inflows to 9.7 billion rupees so far this year.
Dialog Axiata Plc, which saw a net 137.6 million shares of foreign buying, rose 3.31 percent to 12.50 rupees.
Analysts said local investors have no alternative but to buy stocks. Though the central bank has kept interest rates unchanged since January, yield in the one-year t-bill has fallen around 260 basis points so far this year.
The day's turnover was at 4.39 billion rupees ($33.69 million), highest since Sept. 11 and more than three times this year's daily average of over 1.35 billion rupees.
Biggest listed lender by the market capitalisation, Commercial Bank of Ceylon Plc, which led the market gain, rose 3.44 percent to 165.50 rupees, while DFCC Bank Plc gained 7.48 percent to 231.40 rupees.
($1 = 130.3000 Sri Lankan rupee)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)
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