May 21, 2014 / 11:16 AM / in 4 years

Sri Lanka stocks slip from over 11-mth high on profit-taking

COLOMBO, May 21 (Reuters) - Sri Lanka stocks ended weaker on Wednesday from a more than 11 month high hit in the previous session, as investors booked profits in blue-chips, but stockbrokers said the outlook was still positive due to multi-year low interest rates.

The main stock index ended 0.51 percent, or 32.29 points, weaker at 6,289.32, slipping from its highest close since June 10 last year.

“Profit-taking in blue-chips dragged the market down,” a stockbroker said asking not to be named.

Stockbrokers expect gains due to lower interest rates after the central bank kept key rates at multi-year lows on Tuesday for the fourth straight month, as expected.

The exchange witnessed net foreign inflow of 496 million rupees ($3.80 million) worth of shares on Wednesday, extending year-to-date net foreign inflow to 1.34 billion rupees.

The day’s turnover stood at 944.2 million rupees, less than this year’s daily average of 1.03 billion.

Shares of leading fixed-line telephone operator Sri Lanka Telecom PLC fell 2.69 percent to 47 rupees a share, while top conglomerate John Keells Holdings PLC fell 0.17 percent to 233.60 rupees.

The market has been on a rising trend since mid-March as many investors were compelled to return to the stock market because low interest rates have made fixed-income assets less attractive, stockbrokers said.

However, analysts have raised concerns over sluggish economic growth due to lower credit growth and consumer spending.

Despite a multi-year low interest rate regime, data showed private sector credit grew 4.3 percent in March from a year earlier, the slowest expansion since May 2010, while imports in February fell 6.2 percent on the year.

On Monday, central bank Governor Ajith Nivard Cabraal said Sri Lanka’s private sector credit growth would pick up to around 15 percent by the end of this year and continue to improve through 2016. ($1 = 130.3750 Sri Lanka rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

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