Sri Lanka stocks edge up on high turnover
COLOMBO Aug 13 (Reuters) - Sri Lankan stocks rose on Wednesday to end at a near three-year closing high as falling interest rates left investors with few options but to invest in risky assets despite foreign outflows.
Stockbrokers, however, expect a correction during the week, as the market is overbought with the index gaining for seven straight sessions.
The main stock index, closed 0.09 percent, or 6.24 points firmer at 6,954.14, its highest close since Sept. 12, 2011. It has risen 17.6 percent so far this year.
Turnover was 1.82 billion rupees ($14 million), much more than this year's daily average of 1.12 billion rupees.
"The market is struggling simply because it is near its psychological barrier of 7,000," said Dimantha Mathew, manager, research at First Capital Equities (Pvt) Ltd.
"We are expecting bit of a correction on some high networth and blue-chip shares which are overvalued but the rest of the market is positive."
Analysts said hopes of a policy rate cut on Friday and a further fall in interest rates helped boost turnover. Yields in government treasury bills fell 9-14 basis points at a weekly auction on Wednesday.
Better corporate earnings and continued foreign buying too have helped maintain positive sentiment.
Foreign investors were net sellers for the first time in nine sessions. They sold a net 70 million rupees worth of shares on Wednesday. But foreigners have been net buyers of 12.22 billion rupees worth of shares so far this year.
Nestle Lanka Plc, which led the overall index's gain, rose 4.63 percent, while Sri Lanka Telecom Plc gained 1.09 percent.
Commercial Bank of Ceylon Plc, the country's biggest listed lender, rose 0.56 percent to 143.70 rupees. (1 US dollar = 130.2000 Sri Lankan rupee) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)