July 10, 2014 / 10:57 AM / in 4 years

Sri Lanka stocks up for seventh straight session

COLOMBO, July 10 (Reuters) - Sri Lankan stocks rose for a seventh straight session on Thursday to their highest close in 33 months as lower interest rates compelled investors to buy risky assets, while foreign buying also boosted sentiment, stockbrokers said.

The main stock index ended up 0.83 percent, or 55.02 points, at 6,668.86, its highest close since Oct. 10, 2011. It has gained 4.5 percent in seven straight sessions through Thursday.

“We see the resistance level at 7,000. With a P/E ratio of around 14.5, there is still room for gains,” said a stockbroker on condition of anonymity. “I don’t see this as overheating. There could be some profit-taking from time-to-time.”

The gains were led by large-cap consumer staples shares like Ceylon Tobacco Company PLC, which gained 3.12 percent to 1,100 rupees.

Lower interest rates have prompted local investors to buy shares and shift their savings from unattractive fixed assets, analysts said, as yields on treasury bills edged down further at a weekly auction on Wednesday.

Turnover was 2.36 billion rupees ($18.12 million), more than twice this year’s daily average of around 1.07 billion rupees.

Foreign investors were net buyers of 349.8 million rupees worth of shares on Thursday, extending the foreign inflows to 9.29 billion rupees worth of shares so far this year.

Analysts said foreigners have been buying risky assets because they see value in them, while falling yields in fixed assets gradually prompt local investors to shift to equities.

The market has been on a rising trend since late February due to continued foreign buying and lower interest rates. ($1 = 130.2300 Sri Lankan rupees) (Reporting by Shihar Aneez; Editing by Sunil Nair)

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