Sri Lankan stocks extended gains for a 10th straight session yesterday, jumping 1.73 percent to a seven-month high in strong volume led by blue chips.
The Colombo Stock Exchange’s main index gained 95.18 points, to 5,592.03, its highest close since February 2.
It has risen 11.55 percent in the last 10 sessions on the hopes that the new Securities and Exchange Commission head, Nalaka Godahewa, will come up with new market friendly ideas to revive the market, which has fallen 9.51 percent this year.
The bourse is at an overbought region since August 28, Thomson Reuters data shows.
The 14-day Relative Strength Index yesterday was at 89.854, well above the upper neutral range of 70.
Danushka Samarasinghe, research head at Colombo-based TKS Securities, said blue chips have been heavily discounted and given their growth prospects, they are warranted for sharp price appreciation.
“However, with the market having a sharp correction in the recent past with a revival in sentiment, the broad market is recording a sharp price appreciation.
Therefore market participants should be mindful not to chase after overvalued counters purely on a speculative bias,” he told Reuters.
Turnover was Rs.1.89 billion ($14.28 million), more than double this year’s daily average of Rs.880.3 million.
The bourse saw foreign inflows of Rs.38.8 million worth of shares, extending the net inflow so far this year to Rs.28.7 billion.
The rupee closed firmer at 132.25/30 against the dollar, from Friday’s close of 132.30/35 on exporter dollar sales, dealers said.