Stock market gains to more than 11-week high

Reuters: Shares ended at a more than 11-week high on Monday as investors bought beverage and banking shares amid foreign buying into the island nation’s risk assets boosted sentiment.

The benchmark Colombo stock index ended up 0.93%, or 60.46 points, at 6,582.60, its highest close since 25 May.

“The market moved up on thin volumes, but the market is looking better and better with the more stability coming into the market,” said Richard Pieris Securities Ltd Chief Operating Officer Reshan Kurukulasuriya.

Investors hoped that the economic fundamentals would improve after the central bank on 28 July  surprised the markets with a 50-basis points raise in its main interest rates aimed at curbing stubbornly high credit growth.

Foreign investors net bought 62.59 million rupees ($430,172) worth of shares, extending the net foreign inflow to 1.55 billion rupees worth of equities in the last 14 sessions.

However, they have sold Rs. 3.26 billion worth of shares so far this year.

Turnover stood at Rs. 675.1 million, less than this year’s daily average of around Rs. 731.3 million.

Shares in Nestle Lanka Plc jumped 10.25% while Ceylon Tobacco Company Plc gained 1.9% and Cylon Cold Store Plc rose 4.96%.

Shares in biggest listed lender Commercial Bank of Ceylon Plc rose 0.96%.

Analysts said investors also shrugged off a Supreme Court order asking the parliament to stop considering a bill to raise the value-added tax as the draft had not followed due process.

The move could put in jeopardy the government’s ambitious fiscal consolidation plan to reduce the budget deficit to 5.4% of gross domestic product from last year’s 7.4%.