Shares up on hopes of macro economic improvement

cseSri Lankan shares rose on Wednesday, heading for their fifth straight session of gains, as investors continued buying shares hoping for improved macro economic fundamentals after the central bank rate hike, analysts said.

The central bank last week raised its main interest rates by 50 basis points each in a surprise move aimed at curbing stubbornly high credit growth that is adding to concerns about inflationary pressures.

“The indication given by the rate hike is that the rates will stay at these levels and will not come down and the positive factor is that the inflation will be in check,” said Danushka Samarasinghe, research head, Softlogic Stockbrokers.

“We have seen returning interest into the large-cap shares as the valuations are rather attractive and also seen some progress in macro economic factors in snail pace.”

The benchmark Colombo stock index was up 0.32 percent at 6,524.25 at 0707 GMT, its highest since June 14.

Turnover was 861.6 million rupees ($5.91 million).

The Sri Lankan rupee edged up as foreign investors sold dollars to buy bonds and stocks after the central bank’s policy rate hike, dealers said.

One-week rupee forwards, which have been acting as a proxy for the spot rupee, were at 146.00/15 per dollar at 0709 GMT, up from Tuesday’s close of 146.10/15.

“Some foreigners are buying into bonds and also we have seen some foreign inflow into the stock market,” said a currency dealer, asking not to be named.

The spot rupee is tightly managed by the central bank, and market participants use the forward market levels for guidance on the currency.

The spot rupee was not traded on Wednesday.

Spot-next, which are rupee forwards settled a day after the spot rupee settlement, were at 145.90/98 per dollar, compared with Tuesday’s close of 145.95/146.05. ($1 = 145.9000 Sri Lankan rupees) (Reuters)

 

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