Sri Lanka shares at new record high on earning hopes

 * Bourse up 1 pct; retailers buy mid-cap shares

 * Foreign investors sells on net basis

 * Rupee edges up on dollar inflows

 COLOMBO, Jan 24 (Reuters) - Sri Lanka's bourse hit a fresh record high on Monday led by retail investor buying on hopes of better earning in the December quarter, while the rupee edged up on dollar inflows.

 The island's main share index .CSE closed 0.1 percent or 7.36 points firmer at a new record closing high of 7,261.37. It hit a new intraday all-time high of 7,320.22 pints on Monday.

 It has been Asia's best performer with a 9.43 percent gain  so far in 2011 after being the top performer last year with a 96 percent return.

 Turnover was 4.1 billion rupees ($37.3 million), more than the last year's daily average of 2.4 billion. Foreign investors were net sellers of a net 269.2 million rupees' worth shares on Monday and they have sold a net 2.3 billion rupees so far this year after selling a record net 26.4 billion rupees in 2010.

 The bourse is trading at a forward price-to-earnings (P/E) ratio of 18.1, highest among emerging markets, compared with 12.9 in Asian markets and 12 in global emerging markets, Thomson Reuters StarMine data showed. Its 14-day relative strength index is at 86.4, beyond the overbought limit of 70.

 The traded share volume was 186.1 million against five-day average of 177.8 million. Last year's daily average volume was 69.2 million.

 The rupee LKR= closed firmer at 111.91/95 a dollar from Friday's 111.00/03 on high dollar inflows to a foreign bank from trade related transaction, traders said.

 FACTORS TO WATCH:

•  Corporate earnings for the December quarter
•  Whether a technical correction will bring the bourse down
•  If foreign funds buy shares in large volumes

source - in.reuters.com