Shares recover from 1-yr low on foreign bargain-hunting

Reuters: Shares edged up on Friday from a one-year closing low hit in the previous session and after eight straight sessions of losses as foreign investors bought battered stocks.

The Colombo stock index gained 0.3 percent to finish at 6,047.84, edging up from its lowest close since 16 March, 2016 hit on Thursday.

But the bourse fell 0.6 percent during the week, posting its fourth straight weekly decline, due to concerns that the Central Bank would raise interest rates next week.

The index had lost 1.5 percent over the eight sessions through Thursday since the International Monetary Fund urged the Central Bank last week to be ready to tighten monetary policy if credit growth or inflation does not abate.

The Central Bank’s second monetary policy review of the year is due on 24 March.

“Foreigners are buying some blue chips that are at very discounted prices,” senior research analyst with First Capital Equities Atchuthan Srirangan said.

“But retailers and institutional investors are not active.”

Foreign investors net bought shares worth 39.5 million rupees ($260,296.54) in the 13th straight session of net-buying, raising the year-to-date net foreign inflow to 2.5 billion rupees in equities.

Turnover stood at 1.17 billion rupees, well over this year’s daily average of 676.7 million rupees.

Shares of Sri Lanka Telecom PLC gained 3.3 percent, while Dialog Axiata PLC rose 1.8 percent and conglomerate John Keells Holdings PLC edged up 0.1 percent.