Sri Lanka stocks rise to near 5-month high on banks; foreigners sell

Fri Jan 10, 2014 6:43am EST

COLOMBO, Jan 10 (Reuters) - Sri Lankan stocks rose for a
fourth straight session to hit a near five-month high on Friday,
led by financials on hopes of consolidation in the sector, while
foreign investors sold risky assets on a net basis in an
overbought market.
    The main stock index gained 0.23 percent, or 13.80
points, to end at 6,083.14, its highest close since Aug. 22. It
has gained 2.32 percent in the last four sessions, with the
index in an overbought region.
    "Investors believe banks and financial shares will gain
following the central bank's direction for mergers," a
stockbroker said on condition of anonymity. 
    Shares in DFCC Bank PLC rose 6.06 percent to
150.60 rupees, while National Development Bank PLC 
gained 4.34 percent to 180.50 rupees.
    In its financial and monetary policy announcement for 2014,
the central bank revealed plans to merge banks and non-banking
financial firms to strengthen financial stability.
 
    Analysts said the central bank's interest rate cut last week
and the recent fall in T-bill yields had boosted sentiment and
helped sustain the gain.  
    The CSE index gained 4.8 percent in 2013 after losses in the
previous two years, giving a return of 2.18 percent in dollar
terms.
    Many investors locked their funds in risk-free debentures
instead of risky assets last year due to a sluggish bourse and
falling interest rates.
    The day's turnover was 1.38 billion rupees ($10.6 million),
surpassing last year's daily average of about 828.4 million
rupees.
    Foreign investors were net sellers for the first time in six
sessions, selling 72.04 million rupees worth of shares on
Friday. But they have net bought 97.8 million rupees of shares
so far this year. 
    Offshore investors bought a net 22.88 billion rupees worth
of stocks last year.
($1 = 130.7000 Sri Lanka rupees)

 (Reporting by Ranga Sirilal and Shihar Aneez; Editing by
Prateek Chatterjee)
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