3 Min Read
(Adds bourse, rupee close)
By Shihar Aneez
COLOMBO, Aug 7 (Reuters) - Sri Lanka's share market .CSE rose to its highest in more than 14-months on Friday before retreating to close up marginally amid a lack of foreign buying, after the arrest of the new Tamil Tiger leader the night before.
The new head of the Tamil Tigers, the separatist group defeated by the Sri Lankan military after 25 years of war, was being held in the capital Colombo, the military said on Friday. [ID:nSP467070]
Five stockbrokers Reuters spoke to said there was no significant reaction to the arrest, but that it helped spark positive sentiments early in the session.
The all-share index closed 0.08 percent firmer at 2529.53, after reaching an over 14-month high of 2548.65 in the first 90 minutes of trading.
"Lack of foreign buying is still a concern," said Prashan Fernando, executive director at Acuity Stockbrokers. "Local institutional and retail investors are waiting for foreign buying after the IMF loan."
Overseas funds sold 160.4 million rupees of shares on Friday led by hotel sector shares and bought 57 million, leading to a net outflow of 103.35 million rupees, bourse data showed.
Analysts said foreign buying will be the main factor that could boost the market further, after the end of the war and the $2.6 billion loan from International Monetary Fund (IMF) surged retail investor participation.
Traders said there are still worries about poor earnings, while foreigners are not convinced the central bank's steady exchange rate against the dollar will remain under the terms of the loan.
The bourse is up 68.3 percent in 2009 and is one of Asia's best-performing markets. It has surged 32.6 percent since the government declared victory in the war on May 18.
Conglomerate Carson Cumberbatch CARS.CM jumped 10 percent to 239.25 rupees, calculated on a weighted average, while conglomerate Bukit Darah Company BUKI.CM rose 4.5 percent to 1,550 rupees a share, bourse data showed.
John Keells Holdings JKH.CM, which last week posted a 22 percent drop in its net profit for the first quarter, fell 0.18 percent to 134.75 rupees. [ID:nCOL428071]
The rupee LKR= ended flat at 114.90/95 a dollar as a state bank, which the central bank uses to direct the market, bought the dollar at 114.90 for the eleventh straight week.
Central Bank Governor Ajith Nivard Cabraal on Thursday said the central bank had been a net buyer of $250 million from the market to prevent rupee appreciation and build up its reserves.
Dealers said the central bank on Friday sold 1.86 billion rupees worth 46-day Treasury bills at 10.41 percent and 1.43 billion rupees worth 53-day T-bills at 10.43 percent to mop up excess liquidity.
The interbank lending rate or call money rate CLIBOR hardly changed 9.299 percent from Thursday's 9.300 percent.
For secondary market rates, please see <0#LKBMK=>. ($1=114.925 Sri Lankan Rupee) (Editing by Bryson Hull)