Bourse breaks through 7,000 points level; year-to-date return nears 18%
Friday, 15 August 2014 00:12
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Reuters: Stocks broke through the key psychological barrier of 7,000 points on Thursday to end near a three-year closing high as declining interest rates drove investors into risky assets and foreign inflows helped boost sentiment.
The main stock index, which hit 7,018.72 during intra-day trade, ended up 0.27%, or 18.95 points firmer at 6,973.09, its highest close since 9 September 2011.
It has risen 17.93% so far this year. Stockbrokers, however, expect a correction in the overbought market, even as the index gained for the eighth straight session.
Turnover was Rs. 2.02 billion ($ 15.52 million), nearly double this year’s daily average of Rs. 1.12 billion.
Analysts said hopes of a policy rate cut on Friday and a further fall in interest rates helped boost turnover. Yields in Government Treasury bills fell nine to 14 basis points at a weekly auction on Wednesday.
“There is positivity. The market is supported by low interest rates and good earnings,” said Reshan Kurukulasuriya, Chief Operating Officer of Richard Peiris Securities.
“Now, the foreigners are looking at Sri Lanka. There is a premium for banking stocks and some blue chips. There should be a correction going in to September, but it’ll be flat...”
Better corporate earnings and continued foreign buying, too, have helped maintain positive sentiment.
The Bourse saw net foreign inflow of Rs. 453 million on Thursday, extending year-to-date net inflows to Rs. 12.67 billion.
Union Bank of Colombo Plc on Thursday said it had agreed to sell a 70% stake to a subsidiary of TPG Capital Management LP for $ 113 million.
Ceylon Tobacco Company Plc, which led the gain in the overall index, rose 3.64% to Rs. 1,195.80, while Ceylon Cold Stores Plc gained 10.15% to Rs. 247.50.
