Stock market near 3-year high

Tuesday, 5 August 2014 01:26 - - {{hitsCtrl.values.hits}}

Reuters: Stocks hit a near three-year closing high on Monday, led by large cap shares, on expectation of strong corporate earnings and interest rates further falling, even as continued buying by foreign investors propelled a shift into risky assets. The main stock index ended 0.18%, or 12.02 points, firmer at 6,822.15, its highest close since 20 September 2011. It rose 6.82% in July and is up 15.21% so far this year. Hopes over strong corporate earnings, declining interest rates and continued buying by foreign investors have helped boost interest in risky assets in the $21.93 billion-worth stock market. Turnover was Rs. 2.29 billion ($ 17.59 million), more than double this year’s daily average of about Rs. 1.09 billion. Foreign investors were net buyers of Rs. 32.8 million worth of shares on Monday, extending the year to date net foreign inflow to Rs. 10.93 billion. The index has been in the overbought region since 3 July, as local investors moved funds from fixed income to riskier assets because of low interest rates and foreign buying. Gains were led by large-cap share Ceylon Tobacco Company Plc which rose 1.64% to Rs. 1,149.10. Top conglomerate John Keells Holdings Plc rose 0.64% to Rs. 237. The Ceylon Tobacco Company reported a 11% fall in its June quarterly earnings after market hours. Trade Finance & Investments Plc which accounted for 67.4% of the day’s turnover rose 2.94% to 28 rupees. The company, in a disclosure, said five of its shareholders sold 75.43% stake to Commercial Credit and Finance Plc at Rs. 28 a share. Shares in Commercial Credit and Finance rose 1.6% to Rs. 25.40. Lower interest rates have prompted local investors to buy shares and move away from unattractive fixed assets, analysts said. Yields on Treasury bills edged down further by seven to 10 basis points at a weekly auction on Wednesday. The International Monetary Fund urged Sri Lanka on Wednesday to keep key interest rates on hold for the near term and said a cautious approach is warranted.

Rupee steady amid upward pressure

Reuters: The rupee closed unchanged on Monday, but dealers said the currency is under upward pressure because of inflows in the absence of strong growth in private credit and imports. The rupee ended at 130.21/24, unchanged from Friday’s close. “In the absence of demand (for dollars), the rupee will appreciate,” said a currency dealer, adding that exporter dollar sales and inward remittances were offset by importer demand for the greenback. Dealers said dollar buying by two State banks at Rs. 130.21 for imports prevented a sharp appreciation. They said the Central Bank’s dollar buying from the market has increased rupee liquidity and sent yields on Government securities lower amid lack of strong demand for private credit and imports. The Central Bank has absorbed more than $750 million through 14 July from the market to prevent a sharp appreciation in the rupee and support exporters. The International Monetary Fund (IMF) last week urged Sri Lanka to limit its intervention in the foreign exchange market. Finance Secretary P.B. Jayasundera on 23 July said Sri Lanka was building up its foreign exchange reserves while keeping its currency stable as the island-nation sees more dollar inflows.