Sri Lanka shares near 5-mnth high on large caps, foreign buying

Mon Jan 13, 2014 7:14am EST

COLOMBO, Jan 13 (Reuters) - Sri Lankan stocks rose for a
fifth straight session to a near five-month high on Monday, led
by shares of large caps such as Ceylon Tobacco Company Plc
, as falling interest rates helped retail investor
sentiment and foreign investors bought risky assets on a net
basis.
    The main stock index gained 0.55 percent, or 33.25
points, to end at 6,116.39, its highest close since Aug. 21. It
gained 2.88 percent in the last five straight sessions, in an
overbought market.
    "With the interest rates, retail investors are pushed to buy
shares. The confidence is building up, but there is a long way
to go," said a stockbroker on condition of anonymity.
    Shares in Ceylon Tobacco Company Plc rose 3.05 percent to
1,226.30 rupees.
    Analysts said the central bank's interest rate cut on Jan. 2
and the recent fall in T-bill yields had boosted sentiment and
helped sustain the gains.  
    The yield on 91-day T-bills fell at a weekly auction on
Monday to its lowest since January 2007, the date the central
bank made data available. Yields on 182-day and 364-day T-bills
are at their lowest since Oct. 15, 2010. 
    Stockbroker First Capital Equities in a note advised
investors to refrain from taking speculative positions and to
focus on high quality cash-rich companies with strong balance
sheets that have underperformed and have the potential to gain
their intrinsic values.
    The index has risen 3.44 percent so far this year after a
4.8 percent gain in 2013. It fell in 2012 and 2011.
    The day's turnover was 1.38 billion rupees ($10.56 million),
surpassing last year's daily average of about 828.4 million
rupees.
    Both the stock and foreign exchange markets will remain
closed for public holidays on Tuesday and Wednesday. Normal
trading will resume on Thursday.
    Foreign investors were net buyers of 68.4 million rupees
worth of shares on Monday, extending the year-to-date net inflow
to 166.2 million rupees.
    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
Anupama Dwivedi)
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