Stock market gains on foreign buying

Reuters : Stocks closed higher on Friday led by financials, after hitting a more than one-week closing low in the previous session, on increased appetite for risky assets by foreign investors.

The Colombo stock index ended up 0.08 percent at 6,169.57, edging up from its lowest close since 10 January hit on Thursday.

The index hit a two-week high on 13 January after the European Commission proposed increased market access for Sri Lanka as a reform incentive.

Foreign investors net bought Rs. 433.4 million ($2.89 million) worth equities on Friday, the highest net inflow since 8 December, although they have net sold Rs. 1.35 billion worth of shares so far this year.

Turnover stood at Rs. 731.3 million.

Shares in biggest listed lender Commercial Bank of Ceylon PLC rose 1.50 percent, while market heavyweight John Keells Holdings rose 0.57 percent.

“We have seen a foreign inflow after a while and that boosted the turnover and the bulk of the trades were from the foreign trading. Rest of the market was silent,” First Capital Equities (Pvt) Ltd Head of Research at Dimantha Mathew said.

“Because the sentiment is not that great, many investors are on a wait-and-see approach.”

Rising market interest rates, which move in tandem with T-bill yields, have been a cause for concern, brokers said.

Yields on treasury bills rose 1-16 basis points at a weekly auction on Wednesday to a four-month high after the Central Bank Governor signalled reduced intervention to defend the rupee currency.

Investors are also concerned about possible political uncertainty as the main coalition partners in government are contesting local polls separately, analysts said.