COLOMBO, July 2 (Reuters) - Sri Lankan stocks hit a more than one-year high on Wednesday, helped by strong foreign buying and a drop in yields of fixed income assets.
Stockbrokers said foreign investors see value in shares, while local investors are gradually shifting to risky assets from fixed ones.
The main stock index ended 0.89 percent, or 56.51 points, at 6,432.52, its highest close since June 4, 2013.
Turnover was 2.43 billion rupees ($18.7 million), about 2-1/2 times this year’s daily average of 1.04 billion rupees.
Foreign investors were net buyers for a seventh straight session, buying 1.66 billion rupees of stocks on Wednesday and extending foreign inflows this year to 8.93 billion rupees.
Stockbrokers said foreign investors mainly bought into Hemas Holdings Plc.
“If foreign participation continues and there are no unnecessary hiccups, the market will continue to run,” said a stockbroker asking not to be named.
Shares of Hemas Holdings, which accounted for 64.3 percent of the day’s turnover, rose 3.17 percent to 45.50 rupees. Foreign investors bought 33.5 million shares of the company.
Brokers said state funds like the Employees Provident Fund (EPF) and Sri Lanka Insurance sold their stakes to foreign investors. They expect the state funds to buy stocks with the funds they got from Wednesday’s dealings.
Conglomerate John Keells Holdings Plc rose 1.71 percent to 226.10 rupees, while Ceylon Tobacco Co Plc rose 2.18 percent 1076.30 rupees.
Analysts said foreign buying could continue due to lower inflation after government data showed annual inflation eased to 2.8 percent in June, its lowest since February 2012, down from 3.2 percent a month earlier.
The yields on treasury bills edged down further at a weekly auction on Wednesday.
However, analysts said investors are concerned over the recent ethnic violence and possible implications of a government spokesman saying Sri Lanka bought Iranian crude via third parties.
The market has been on a rising trend since late February due to continued foreign buying and lower interest rates. ($1 = 130.2500 Sri Lankan Rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)