Bourse gains for third day to hit near four-week closing high

Reuters - Shares rose on Friday for the third straight session to hit a near four-week closing high as investors picked up blue chip stocks.

The Colombo stock index ended 0.36 percent higher at 6,718.83, its highest close since 22 May, and recorded its first weekly gain in four.

Analysts said investor reaction to slower economic growth in the first quarter was mixed.

The economy grew 3.8 percent in the first quarter, slowing from the previous quarter’s 5.3 percent, the state-run Census and Statistics Department said on Thursday.

“The first-half growth will be affected by the drought and the floods, but we expect a pick up in the second half,” said Atchuthan Srirangan, a senior research analyst at First Capital Holdings PLC.

“But slower growth this year will cause a higher loan-to-GDP ratio, which is a concern.”

Turnover on Friday was Rs. 966.4 million $6.3 million), above this year’s daily average of Rs. 899.4 million.

Foreign investors were net buyers of Rs. 63.3 million worth of shares, extending the year-to-date net foreign inflow to Rs. 20.71 billion.

Inflation could rise in the short term, especially due to crop damage and difficulties in distributing fresh-food produce and staple food items, analysts said, after the recent floods and landslides, caused by the worst torrential rains in 14 years.

Shares in Hemas Holdings PLC ended up 4.2 percent, while Ceylon Tobacco Company PLC rose 1.2 percent.