Sri Lankan shares up; rate hike boosts sentiment on economy
COLOMBO, Aug 3 (Reuters) – Sri Lankan shares notched up a fifth session of gains to close at their highest in more than seven weeks on Wednesday, on hopes that economic fundamentals would improve after the central bank’s rate hike last week, analysts said.
The benchmark Colombo stock index ended up 0.13 percent at 6,511.58, its highest close since June 14.
The turnover hit a 2-1/2-month high with top conglomerate John Keells Holdings accounting for 36 percent of traded volume.
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.
"The indication given by the hike is that the rates will stay at these levels and will not come down, and the positive factor is that the inflation will be in check," said Danushka Samarasinghe, research head, Softlogic Stockbrokers.
Overseas investors were net buyers of 24.1 million rupees worth of shares on Wednesday, extending the net foreign inflow during the last six sessions to 750 million rupees worth of equities. However, they have been net sellers of 4.06 billion rupees worth of shares so far this year.
Stockbrokers said the market is also awaiting an economic policy announcement from Prime Minister Ranil Wickremesinghe, scheduled later this month.
Turnover stood at 1.4 billion rupees ($9.61 million), its highest since May 18 and more than this year’s daily average of around 733.4 million rupees.
Shares in Lanka ORIX Leasing Company Plc rose 3.65 percent, John Keells Holdings gained 0.6 percent, while biggest-listed lender Commercial bank of Ceylon Plc climbed 1.2 percent.