Bourse ends steady; energy price cut boosts sentiment
Thursday, 18 September 2014 00:05
-
- {{hitsCtrl.values.hits}}
Reuters: Stocks ended little changed on Wednesday as gains in mid-cap shares were offset by profit-taking in some large-caps amid heavy retail participation on positive sentiment after the Government reduced energy prices.
The main stock index edged up 0.04%, or 3.10 points, to 7,179.20. The Bourse hit its highest close since 10 June 2011 of 7,218.68 on Friday. “There is heavy retail participation as the energy price reduction is seen as a positive development. But there was profit-taking in over-valued large-cap shares,” said Dimantha Mathew, Manager Research at First Capital Equities Ltd.
President Mahinda Rajapaksa cut energy prices across the board on Tuesday after officially opening a $1.35 billion Chinese-financed 900 MW coal power project.
The cut in energy prices would help reduce manufacturing costs, analysts said.
Brokers expected the market to continue its bullish run on foreign buying, low interest rates and good earnings expectations, despite profit-taking in some counters.
Yields on Treasury bills fell 3-4 basis points at a weekly auction on Wednesday.
The index has gained 21.42% so far this year.
The Bourse has been in an overbought region since July. The Relative Strength Index, a momentum indicator tracked by chartists, rose to 80.087 on Wednesday compared with Monday’s 79.164, Thomson Reuters data showed.
Stocks are deemed “overbought” above the 70-mark, signalling a reversal in the near term.
Shares in leading fixed-line telephone operator Sri Lanka Telecom Plc, which led the overall gain in the index, rose 1.51% to Rs. 53.90, while large-cap Nestle Lanka Plc fell 2.34% to Rs. 2,070.10.
The day’s turnover was Rs. 2.18 billion ($ 16.73 million), more than this year’s daily average of Rs. 1.25 billion.
Foreign investors were net buyers of Rs. 424.3 million worth of shares on Wednesday, extending the year-to-date net foreign buyers of Rs. 10.88 billion.
