Stock market extends gains ahead of Central Bank rate call

Reuters: shares extended gains into a third session on Monday, posting their highest close in nearly one year, with blue chips leading the rise ahead of the central bank’s monetary policy rate announcement.

Volume was moderate as many investors were on the sidelines ahead of holidays. The financial markets will be closed on Wednesday and Thursday for Buddhist religious holidays.

With pressure on the rupee abating and yields for government securities easing, the Central Bank is likely to keep key interest rates steady at more than three-year highs at a policy meeting on Tuesday, a Reuters poll showed.

The Colombo stock index ended 0.4% firmer at 6,667.46, its highest close since 18 May 2016. It added 0.5% last week, its sixth straight weekly gain.

“It is really a short week and investors are not there,” said Acuity Stockbrokers CEO Prashan Fernando.

“The whole week is going to see thin volume due to the holidays.”

Turnover stood at Rs. 767.5 million ($ 5.04 million), less than this year’s daily average of Rs. 899 million.

Foreign investors net bought shares worth Rs. 137.9 million, extending their year-to-date investment in equities to Rs. 16.74 billion.

They bought a net Rs. 14.25 billion in the last 31 sessions, and out of these, the bourse saw net foreign buying in 30.

Reduction in t-bill yields, stable currency on expectation of inflows from foreign borrowing, an IMF statement on the disbursement of the third tranche of $ 1.5 billion loan, and lower-than-expected yield for a $ 1.5 billion sovereign bond last week have helped boost sentiment, analysts said.

Conglomerate John Keells Holdings Plc rose 0.5%, Hatton National Bank Plc ended 0.5% firmer and Commercial Bank of Ceylon Plc climbed 0.3%.