Sri Lankan shares rise as investors pick blue chips; rupee steady
COLOMBO, Aug 5 (Reuters) – Sri Lankan shares rose on Friday, hovering near a seven-week high hit earlier this week, as investors bought blue chips expecting better profits after hopes rose that a recent rate increase by the central bank would help improve the island nation’s macroeconomic outlook.
The benchmark Colombo stock index was 0.7 percent higher at 6,523.78 at 0640 GMT, near its highest since June 14 hit on Wednesday. Turnover stood at 664.8 million rupees ($4.57 million).
"Market is up on renewed buying interest after yesterday’s consolidation," said Atchuthan Srirangan, a senior research analyst at First Capital Equities (Pvt) Ltd.
On Thursday, the bourse ended lower on profit-taking, snapping five days of gains.
"The good thing is there is not much of selling pressure in the market. We will see market gaining with some consolidation in between," Srirangan said.
Shares have risen on hopes economic fundamentals would improve after the central bank last week raised its main interest rates by 50 basis points each in a surprise move aimed at curbing stubbornly high credit growth that is adding to concerns about inflationary pressures.
Stockbrokers said the market is waiting for an economic policy announcement from Prime Minister Ranil Wickremesinghe, scheduled later this month.
The Sri Lankan rupee, meanwhile, was steady as mild importer dollar demand was offset by selling of the greenback by foreign investors to buy bonds and stocks.
The spot rupee, which traded for the second straight session on Friday, was at 145.60/68 per dollar at 0648 GMT, a dealer said.
The spot rupee is usually managed tightly by the central bank, and market participants use the forward market levels for guidance on the currency.
One-week rupee forwards were at 145.75/85 per dollar, up from Thursday’s close of 145.80/88.
Foreign investors have net bought 64.5 billion rupees ($443.30 million) worth of government securities from April 29 to July 27, after the IMF agreed to a $1.5-billion bailout package, central bank data showed.