Shares rise for 5th session to 4-month closing high

Reuters:  Shares rose for a fifth straight session on Wednesday and posted their highest close in four months, led by gains in diversified and beverage stocks including Ceylon Tobacco Company Plc and Nestle Lanka Plc.

However, the gains were capped as foreign investors continued to sell and on concerns that the government’s move to increase the value added tax and impose new taxes, effective from 2 May, would hit the bottom lines of companies.

“Market was up on the positive sentiment from last few days,” said First Capital Equities Ltd  Head of Research Dimantha Mathew.

The benchmark stock index rose 0.36 %  to 6,661.45, its highest closing level since 8 January.

Shares of Ceylon Tobacco Company rose 0.9 %, while Nestle Lanka gained 1.2 %. Turnover was Rs. 1.26 billion ($8.7 million), the highest since 29 April, and well above this year’s daily average of around Rs. 784 million.

Foreign investors offloaded a net Rs. 452.8 million worth of shares, extending the net selling so far this year to Rs. 3.75 billion worth of equities.

The stock index gained 1.2 %  last week, its fifth straight weekly rise. The 14-day relative strength index stood at 81.677 on Wednesday, compared with Tuesday’s 80.541, Thomson Reuters data showed. A level of 70 and above indicates the market is overbought.