COLOMBO Aug 7 Sri Lankan stocks gained more
than 1 percent on Thursday, hovering near a three-year closing
high, led by large caps as indications of a cut in key policy
rates by the central bank governor helped investors shift to
The main stock index gained 1.1 percent, or 74.92
points to 6,908.18, its highest close since September 14, 2011,
boosting market capitalisation by 31.44 billion rupees ($241.53
million). It has risen 16.8 percent so far this year.
"Buying by foreign investors in John Keells Holdings
pushed up foreign inflows and turnover," said Reshan
Wediwardana, research analyst at First Capital Equities (pvt)
Stockbrokers said investors had "no option" but to buy into
stocks due to low interest rates as the market is expecting
another rate cut during the Aug. 15 policy rate announcement.
Central bank chief Ajith Nivard Cabraal said on Thursday
there was a greater chance of a cut, rather than a hike, in key
policy rates, a day after yields on one-year government debt
fell to 6.45 percent, below the rate of 6.50 percent at which
the central bank mops up liquidity from commercial banks.
Hopes over strong earnings, declining interest rates and
continued buying by foreign investors have helped boost interest
in risky assets in the $22 billion-worth stock market.
Shares in Keells ended 0.84 percent firmer at 238 rupees,
while large cap shares like Ceylon Tobacco Company and
Carson Cumberbatch helped boost the main index with
2.54 percent and 2.17 percent gains, respectively.
Turnover was 2.24 billion rupees ($17.21 million), more than
double this year's daily average of about 1.01 billion rupees.
Foreign investors bought a net 424.6 million rupees worth of
shares on Wednesday, extending the year-to-date net foreign
inflow to 11.68 billion rupees.
The index has been in the overbought region since July 3, as
local investors moved funds from fixed income to riskier assets
such as shares because of low interest rates and foreign buying.
(1 US dollar = 130.1700 Sri Lankan rupee)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju