April 24, 2015 / 12:10 PM / 4 years ago

Sri Lanka shares rise to over 6-week high on banks

COLOMBO, April 24 (Reuters) - Sri Lankan shares rose to over six-week high on Friday, despite foreign outflow from risky assets, as investors picked up shares of finance companies on expectations of better earnings, with positive sentiment continuing due to lower interest rates.

The main stock index ended 0.22 percent or 15.39 points firmer at 7,129.78, its highest close since March 10. It has, gained 3.31 percent since the central bank cut key rates on April 15, while yields on t-bills have fallen 26-36 basis points since then.

“There is lot of interest in finance companies specially on the micro financing with low interest rates,” a stockbroker said on condition of anonymity.

“Still people are not sure of the elections.”

Some analysts said the markets would stay volatile until parliamentary elections are announced.

The market saw a net foreign outflow for the third straight session on Friday. They have been net sellers of 35.1 million rupees worth shares on Friday extending the net foreign outflow for the past three sessions to 168.8 million rupees. But foreign buying stood at 3.63 billion rupees so far this year.

Turnover was 615.4 million rupees, compared with this year’s daily average of around 1.08 billion rupees.

Analysts said the market could be dull until the perception on political uncertainty is addressed and many investors were in a wait-and-watch mode before the parliamentary elections.

Shares of Commercial Credit and Finance Plc rose 13.01 percent, while Leading fixed-line telephone operator Sri Lanka Telecom Plc advanced 1.28 percent.

The index lost 6.6 percent last month, its biggest monthly drop since October 2012, as investors sold holdings to settle margin trades amid concerns about political stability and a rise in interest rates.

Investors have been cautious due to political uncertainty as Prime Minister Ranil Wickremesinghe’s party does not have a majority in parliament and President Maithripala Sirisena promised to dissolve the parliament after the end of his 100-day programme on April 23.

The government will present constitutional reforms, including establishing independent police, judiciary, and election and public service commissions in the parliament on Monday and debate on them for two days before voting. ($1 = 132.9000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

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