Stocks rebound; turnover slumps to eight month low

Reuters: Sri Lanka’s benchmark share index rose on Thursday for the first time in seven sessions on bargain-hunting, amid thin volumes caused by low liquidity, a credit shortage and a trading delay prompted by heavy rains.

Sri Lanka’s main share index rose 34.52 points or 0.53 percent to 6,569.61, from a near one-month closing low in the previous session. It is Asia’s best performer in 2010 with a 94 per cent gain.

The heaviest rainfall in 18 years delayed trading by 90 minutes as transportation and communication were hampered.

The bourse is trading at the highest forward price-to-earnings ratio in Asia and global emerging markets at 20.2 times, compared with 13.8 and 13.0 respectively, Thomson Reuters StarMine data showed.

The CSE’s 14-day relative strength index is at 47.6, between the neutral limit of 30-70. Foreign investors have sold a net Rs. 25.8 billion in shares this year, but on Thursday bought a net Rs. 49 million. Turnover was Rs. 558.2 million ($5 million), the lowest since 22 March, and less than the 2009 daily average of Rs. 593.6 million.

The rupee closed firmer at 111.58/60 rupees a dollar from Wednesday’s close of 111.66/70 due to thin inflows of dollars in the absence of importers due to the floods, currency dealers said.