Bourse up on foreign buying

Tuesday, 13 November 2012 00:00 - - {{hitsCtrl.values.hits}}

Stocks gained for the seventh straight session on Monday to end at a more than three-week high led by foreign buying and supported by optimism a new Budget will bring measures to boost the capital market. But concern over high interest rates limited trading volume, analysts said.

The Colombo Stock Exchange’s main index rose 0.19 per cent, or 10.45 points, to end at 5,599.88, its highest level since 19 October.

Foreigners bought a net Rs. 43.6 million ($ 333,300) worth of shares, extending the net foreign inflow this year to Rs. 35 billion.

Turnover, however, was Rs. 244 million compared with the year’s daily average of Rs. 909.4 million.

“Volumes are down because the confidence has not returned,” said a stockbroker who declined to be identified.

“Nobody wants to take a risk to invest in stocks when they can earn a risk-free rate of around 15 per cent in fixed deposits.”

President Mahinda Rajapaksa, who is also Finance Minister, announced in his Budget speech proposals to encourage new listings of shares and debentures through tax exemptions.

Under the Budget, presented on Thursday and to be voted on at the end of the week, the Government also aims to reduce the fiscal deficit to 5.8 per cent of Gross Domestic Product in 2013, while reaching 7.5 per cent economic growth next year.

The rupee closed firmer at 130.40/50 to the dollar compared with Friday’s close of 130.75/85 in dull trade, dealers said.