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Sri Lankan stocks slips from near 3-yr high on technical correction
August 5, 2014 / 11:31 AM / 3 years ago

Sri Lankan stocks slips from near 3-yr high on technical correction

COLOMBO, Aug 5 (Reuters) - Sri Lankan stocks slipped on Tuesday from a near-three-year closing high in the previous session led by large-cap shares such as Ceylon Tobacco Company Plc and on technical correction in some over-valued shares, analysts said.

The main stock index ended 0.1 percent, or 6.73 points, weaker at 6,815.42, slipping from its highest close since September 20, 2011 hit on Monday. It rose 6.82 percent in July and is up 15.27 percent so far this year.

“Drop in CTC led the decline in the market. CTC’s lower-than-expected results and some correction in over-valued shares brought the market down,” said a stockbroker asking not to be named.

The bourse hit a near-three-year high on Monday on expectation of strong corporate earnings and interest rates falling further with continued buying by foreign investors.

Hopes of strong corporate earnings, declining interest rates and continued buying by foreign investors have helped boost interest in risky assets in the $21.97 billion-worth stock market.

Turnover was 1.57 billion rupees ($12.06 million), more than this year’s daily average of about 1.09 billion rupees.

Foreign investors were net buyers of 107.1 million rupees worth of shares on Tuesday, extending the year-to-date net foreign inflow to 11.04 billion rupees.

The index has been in the overbought region since July 3, as local investors moved funds from fixed income to riskier assets because of low interest rates and foreign buying.

Losses were led by large-cap share Ceylon Tobacco Company Plc which fell 1.04 percent to 1,137.20 rupees a day after the company reported a 11 percent fall in June quarterly earnings.

Shares in Carson Cumberbatch Plc fell 1.08 percent to 460 rupees while top conglomerate John Keells Holdings Plc fell 0.04 percent to 236.90 rupees.

Shares in biggest listed lender Commercial Bank of Ceylon Plc fell 0.98 percent to 141.50 rupees.

Capital Alliance Finance Plc in a discloser to the bourse said its controlling shareholder Capital Alliance Holdings Limited divested 68.43 percent of its issued capital to Cargills Bank at prices ranging from 15.40 rupees to 15.50 rupees.

Lower interest rates have prompted local investors to buy shares and move away from unattractive fixed assets, analysts said. Yields on treasury bills edged down further by 7-10 basis points at a weekly auction on Wednesday.

The International Monetary Fund urged Sri Lanka on Wednesday to keep key interest rates on hold for the near term and said a cautious approach is warranted. ($1 = 130.1800 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

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