REUTERS: Sri Lankan shares rose yesterday, closing the first week of the New Year on a firm note, on the back of heavy foreign buying in blue chips.
The Colombo Stock Index ended 0.85 percent firmer at 6,514.73, its highest close since Nov. 11.
It rose 2.3 percent this week, in its second consecutive weekly rise.
Foreign investors net bought shares worth Rs.357.1 million (US$ 2.33 million) yesterday, extending the net foreign inflow in this year to Rs.1.96 billion.
They had net bought Rs.18.5 billion worth equities in 2017 and Rs.633.5 million in 2016.
Turnover stood at Rs.1.4 billion yesterday, more than last year’s daily average of Rs.915.3 million.
Shares in conglomerate John Keells Holdings Plc rose 2.6 percent, Dialog Axiata Plc gained 3.1 percent and Melstacorp Ltd climbed 3.1 percent.
There was continued buying interest with an added interest in blue chips, said Dimantha Mathew, head of research at First Capital Holdings.
“There is renewed interest from foreign investors which is a good sign,” said Mathew, adding that he expected the positive trend to continue due to declining market interest rates.
Treasury bill rates fell 188 basis points to 216 basis points between March and end-December 2017, mainly driven by foreign investors buying treasury bonds, resulting in declining market interest rates.
The country’s 2018 economic growth trajectory is likely to help boost market sentiment, analysts said.
Sri Lanka’s economic growth in 2018 is forecast at 5-5.5 percent, bouncing back from an anticipated four-year low of less than 4 percent last year, Central Bank Governor Indrajit Coomaraswamy said on Wednesday. The Central Bank kept its benchmark interest rates unchanged last week, saying inflation and private sector credit growth have cooled to a manageable level as policy makers focus on supporting a slowing economy.