July 17, 2015 / 12:10 PM / 4 years ago

Sri Lanka stocks close at highest in nearly 7 weeks

COLOMBO, July 17 (Reuters) - Sri Lankan stocks closed at a near seven-week high on Friday led by select shares in heavy trade as hopes of political stability after the Aug.17 parliamentary polls lifted sentiment.

Foreign investors however cut holdings in blue chips, with net outflow of 906.9 million rupees ($6.78 million) on Friday reversing year-to-date net inflow for the first time since Feb.2.

Foreign investors have sold a net 762.9 million rupees worth of shares so far this year, with outflows for the past 37 sessions alone reaching 6.7 billion rupees.

Sri Lanka’s main stock index ended up 0.53 percent, or 37.82 points, at 7,161.96, its highest close since June 1.

“Lot of buying interest was seen; especially after the president’s speech, some confidence level has been building up on the expectation of a stable government,” said Dimantha Mathew, a research manager at First Capital Equities (Pvt) Ltd.

Sri Lankan President Maithripala Sirisena on Tuesday criticised a comeback bid by Mahinda Rajapaksa, the rival he beat in elections last January, and his own allies for backing him to become prime minister.

Analysts see Sirisena’s statement as a step towards strengthening his grip and one that is likely to help the ruling coalition win.

The day’s turnover stood at 1.95 billion rupees ($14.57 million), the highest since July 3 and well above this year’s daily average of 1.06 billion rupees.

Shares in mobile phone operator Dialog Axiata Plc rose 3.67 percent, while Lanka ORIX Leasing Company Plc rose 4.29 percent, pushing up the index. ($1 = 133.8000 Sri Lankan rupees) (Reporting by Ranga Sirilal; Editing by Biju Dwarakanath)

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