Bourse near 5-month high on large caps, foreign buying
Tuesday, 14 January 2014 00:04
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Reuters: Stocks rose for a fifth straight session to a near five-month high on Monday, led by shares of large caps such as Ceylon Tobacco Company Plc, as falling interest rates helped retail investor sentiment and foreign investors bought risky assets on a net basis.
The main stock index gained 0.55%, or 33.25 points, to end at 6,116.39, its highest close since 21 August. It gained 2.88% in the last five straight sessions, in an overbought market.
“With the interest rates, retail investors are pushed to buy shares. The confidence is building up, but there is a long way to go,” said a stockbroker on condition of anonymity.
Shares in Ceylon Tobacco Company Plc rose 3.05% to Rs. 1,226.30.
Analysts said the Central Bank’s interest rate cut on 2 January and the recent fall in T-bill yields had boosted sentiment and helped sustain the gains.
The yield on 91-day T-bills fell at a weekly auction on Monday to its lowest since January 2007, the date the Central Bank made data available. Yields on 182-day and 364-day T-bills are at their lowest since 15 October 2010.
Stockbroker First Capital Equities in a note advised investors to refrain from taking speculative positions and to focus on high quality cash-rich companies with strong balance sheets that have underperformed and have the potential to gain their intrinsic values.
The index has risen 3.44% so far this year after a 4.8% gain in 2013. It fell in 2012 and 2011.
The day’s turnover was Rs. 1.38 billion ($ 10.56 million), surpassing last year’s daily average of about Rs. 828.4 million.
Both the stock and foreign exchange markets will remain closed for public holidays on Tuesday and Wednesday. Normal trading will resume on Thursday.
Foreign investors were net buyers of Rs. 68.4 million worth of shares on Monday, extending the year-to-date net inflow to Rs. 166.2 million.
Offshore investors bought a net Rs. 22.88 billion worth of stocks last year.
