July 23, 2014 / 12:20 PM / in 3 years

Sri Lanka stocks slip from 34-month high on profit taking

COLOMBO, July 23 (Reuters) - Sri Lankan stocks slipped on Wednesday from their 34-month closing high hit the previous day as investors booked profits in diversified and banking shares, brokers said.

The main stock index ended 0.18 percent, or 12.39 points weaker at 6,783.98, slipping from their highest close since Sept. 20, 2011, hit on Tuesday. It has gained 6.35 percent so far this month.

The index had surged in the previous session as local investors moved funds from fixed income to riskier assets in view of the low interest rates.

“Today’s fall is led by Keells, but the market is bullish. We are expecting earnings to be good and the economy to have slightly picked up which will give a bit of a boost for earnings also,” said a Dimantha Mathew, Manager Research at First Capital Equities (pvt) Ltd.

Turnover was 1.03 billion rupees ($7.91 million), in line with this year’s daily average of about 1.09 billion rupees.

Foreign investors were net buyers of 242.8 million rupees worth of shares on Wednesday, extending the year-to-date net foreign inflow in shares to 10.32 billion rupees.

Shares of conglomerate John Keells Holdings Plc fell 1.88 percent to 239.90 rupees, while biggest listed lender Commercial Bank of Ceylon Plc fell 0.28 percent to 144.50 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 at a weekly auction on Wednesday.

The index has been in the overbought region since July 3. It has risen 14.73 percent so far this year.

Foreigners have been buying risky assets because they see value in them, analysts said.

$1 = 130.2300 Sri Lankan Rupees Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anupama Dwivedi

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