Nov 19 (Reuters) - Sri Lankan stocks ended a six-day gaining streak on Wednesday after hitting a more than 3-1/2 year high earlier in the session as investors booked profits in diversified and telecommunications stocks.
But continued foreign buying, low interest rates and hopes of better corporate earnings prevented further falls, traders said.
The main stock index fell 0.31 percent, or 23.13 points, to 7,525.10 after hitting a high of 7,562.52, the highest since April 18, 2011.
"The market is down on profit-taking and uncertainty ahead of the election announcement, said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.
Analysts said investors were awaiting to see the direction of market after Sri Lankan President Mahinda Rajapaksa declared a snap election in January, aiming for an unprecedented third term.
The market has been in the overbought region since Nov. 13. The relative strength index, a momentum indicator tracked by chartists, was at 71.784 on Wednesday above the upper neutral range of 70, but slipping from Tuesday's 76.644, Thomson Reuters data showed.
The Central Bank of Sri Lanka kept key policy rates steady at record lows for a 10th straight month, and said stable inflation and steady credit expansion should help the economy grow by around 8 percent over this year and next.
Turnover was 1.83 billion Sri Lankan rupees ($13.97 million), exchange data showed, more than this year's daily average of 1.44 billion rupees.
Foreign investors were net buyers of 144.2 million rupees worth of shares, extending net foreign buying so far this year to 18.57 billion rupees, exchange data showed.
But continued foreign buying, low interest rates and hopes of better corporate earnings prevented further falls, traders said.
The main stock index fell 0.31 percent, or 23.13 points, to 7,525.10 after hitting a high of 7,562.52, the highest since April 18, 2011.
"The market is down on profit-taking and uncertainty ahead of the election announcement, said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.
Analysts said investors were awaiting to see the direction of market after Sri Lankan President Mahinda Rajapaksa declared a snap election in January, aiming for an unprecedented third term.
The market has been in the overbought region since Nov. 13. The relative strength index, a momentum indicator tracked by chartists, was at 71.784 on Wednesday above the upper neutral range of 70, but slipping from Tuesday's 76.644, Thomson Reuters data showed.
The Central Bank of Sri Lanka kept key policy rates steady at record lows for a 10th straight month, and said stable inflation and steady credit expansion should help the economy grow by around 8 percent over this year and next.
Turnover was 1.83 billion Sri Lankan rupees ($13.97 million), exchange data showed, more than this year's daily average of 1.44 billion rupees.
Foreign investors were net buyers of 144.2 million rupees worth of shares, extending net foreign buying so far this year to 18.57 billion rupees, exchange data showed.
Shares in Ceylon Tobacco Company Plc fell 1.57 percent to 1,131 rupees, leading overall fall, while Dialog Axial Plc fell 0.80 percent.
($1 = 131.0000 Sri Lankan rupee)
(Reporting by Ranga Sirilal; Editing by Anand Basu)
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