Sri Lankan stocks up on expectation of better earnings
COLOMBO, July 30
COLOMBO, July 30 (Reuters) - Sri Lankan stocks rose on Wednesday to a near three-year closing high on expectation of strong corporate earnings after market heavyweight John Keells Holdings' upbeat results, while lower interest rates also helped sentiment.
The main stock index ended 0.26 percent, or 17.57 points, higher at 6,801.84, its highest close since Sept. 20, 2011. It has gained 6.6 percent so far this month.
"Earning prospects are good and the market will continue to run on earning hopes though some expect a correction," said a stockbroker asking not to be named.
Lower interest rates have prompted local investors to buy shares and move away from unattractive fixed assets, analysts said. Yields on treasury bills edged down further by 7-10 basis points at a weekly auction on Wednesday.
The International Monetary Fund urged Sri Lanka on Wednesday to keep key interest rates on hold for the near term and said a cautious approach is warranted.
The global lender said the central bank should be ready to raise policy rates "with economic activity and private credit growth on the rise, while there was also an opportunity for a cut in the rates that might benefit the investment environment and because of the current low inflation of below 5 percent.
Turnover was 973 million rupees ($7.47 million), less than this year's daily average of about 1.09 billion rupees.
Foreign investors were net buyers of 151.2 million rupees worth of shares, extending the year-to-date net foreign inflow in shares to 10.85 billion rupees.
The index has been in the overbought region since July 3, having risen 15.04 percent so far this year as local investors moved funds from fixed income to riskier assets because of low interest rates.
Shares of Ceylon Tobacco Company Plc, which mainly moved up the index, jumped 4.48 percent to 1,150.40 rupees, while Dialog Axiata Plc rose 0.93 percent to 10.90 rupees.
Conglomerate John Keells Holdings Plc, which posted a 35 percent growth in its June-quarter profit, fell 0.42 percent to 237 rupees. Analysts said investors sold the stock, saying it was overheated. ($1 = 130.2000 Sri Lankan Rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)
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