COLOMBO Aug 8 Sri Lankan stocks rose to a near
three-year closing high on Friday as hopes of a policy rate cut
and further fall in interest rates led investors to snap up
banking and diversified shares amid continued buying by foreign
The main stock index edged up 0.15 percent, or 10.05
points to 6,918.23, its highest close since September 13, 2011.
It has risen 17 percent so far this year.
"The market continued its run on low interest rates, good
results and continued foreign buying," said a stockbroker
requesting not to be named.
Foreign investors bought a net 346.6 million rupees worth of
shares on Friday, extending the year-to-date net foreign inflow
to 12.03 billion rupees.
Turnover was 1.58 billion rupees ($12.14 million), more than
this year's daily average of about 1.11 billion rupees.
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 on Thursday said
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, 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.
Gains were led by Distilleries Company of Sri Lanka Plc
which rose 2.99 percent to 210.90 rupees a share while
DFCC Bank rose 2.51 percent 175.40 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 rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju