May 26, 2014 / 11:27 AM / in 4 years

Sri Lanka stocks edge up from 2-week low; turnover at 2-month low

COLOMBO, May 26 (Reuters) - Sri Lanka stocks edged up in thin trade on Monday from a two-week low hit in the previous session led by Sri Lanka Telecom PLC, but turnover slumped to its lowest in two months.

The main stock index ended 0.20 percent, or 12.71 points, firmer at 6,293.02, edging up from its lowest close since May 8 hit on Friday.

The day’s turnover slumped to its lowest since March 24, bourse data showed. It stood at 291.3 million rupees, well below this year’s daily average of 1.02 billion.

Stockbrokers said the low turnover was due to sluggish foreign participation owing to holidays in the United States and Britain.

The bourse saw a net foreign inflow of 46.04 million rupees ($353,100) on Monday, extending year-to-date net foreign inflow to 1.83 billion rupees.

Stockbrokers expect the market to gain in the near future 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.

Shares of Sri Lanka Telecom PLC rose 1.46 percent to 48.80 rupees, pushing up the overall index.

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.

The latest trade data, released on Monday, showed imports have gained 8.2 percent in March, while exports hit a record high of $1.07 billion helping to narrow the March trade deficit by 15.5 percent compared to a year ago.

Central bank Governor Ajith Nivard Cabraal on May 19 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 = 130.4000 Sri Lanka rupees Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair

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