Stock market reaches near 4-month closing high

Tuesday, 10 May 2016 00:27 - - {{hitsCtrl.values.hits}}

Reuters: Shares edged up on Monday and hit their highest close in about four months, led by beverage and diversified stocks amid foreign investors’ buying.

However, the gains were capped as investors were worried that the Government’s move to increase the Value Added Tax (VAT) and impose new taxes effective from 2 May would hit the bottom lines of companies.

The benchmark stock index rose 0.04% to 6,594.80, its highest closing level since 11 January and the third session of gains.

The index gained 1.2% last week, its fifth straight weekly rise. The 14-day relative strength index ended at 78.277 on Monday, compared with Friday’s 78.147, Thomson Reuters data showed. A level of 70 and above indicates the market is overbought.

“Market saw some volatility today as the index is in overbought region, we will see some profit-taking here and there,” said Dimantha Mathew, Head of Research, First Capital Equities Ltd.

Foreign investors, who have sold equities worth Rs. 2.85 billion ($19.59 million) so far this year, were net buyers for the third straight session on Monday. They bought a net Rs. 27.7 million worth of shares.

Turnover stood at Rs. 595.2 million, well below this year’s daily average of around Rs. 774.9 million.

Shares of Ceylon Tobacco Company Plc rose 0.84%, while conglomerate John Keells Holdings Plc gained 0.64%.