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Friday, January 7, 2011

Sri Lanka shares up on retail buying; rupee edges down

* Bourse at 3-mo high; High turnover, volume

* Foreign investors continue to sell shares despite gains

* Rupee edges down on importer dlr demand

COLOMBO, Jan 7 (Reuters) - Heavy retail buying on Friday drove Sri Lanka's stock market higher for a sixth session and deeper into overbought territory, while the rupee ended down on importer dollar demand.

The island's main share index .CSE rose 1.21 percent or 82.23 points to 6,891.96, its highest close since Oct. 5, and has gained 3.9 percent in the last six sessions.

It has been Asia's best performer with 3.86 percent gain in the first week of 2011 after being the top performer last year with a 96 percent gain.

Local LP gas distributor Laugfs Gas LGGL.CM jumped 20.5 percent, while conglomerate Richard Pieris RICH.CM gained 1.5 percent. Both of them were the top traded shares by turnover, Reuters data showed.

Friday's turnover was 4.1 billion rupees ($37 million), well above the 2010 daily average of 2.4 billion rupees. Foreign investors were net sellers for the fifth session in a row with 35.3 million rupees on Friday, extending the net outflow to 1.1 billion rupees in 2011. They sold 26.4 billion rupees last year.

The traded share volume was at 304 million, against a five-day and 30-day average of 73.8 million and 57.7 million respectively. The 90-day average volume is 65 million. Last year's daily average volume was 69.2 million.

The bourse is trading at a forward price-to-earnings (P/E) ratio of 17.7, the highest among emerging markets, compared with 13.4 in Asian markets and 12.4 in global emerging markets, Thomson Reuters StarMine data showed. It's 14-day relative strength index is at 76.8, beyond the overbought limit of 70.

Sri Lanka's rupee LKR= closed weaker at 110.85/88 a dollar from Thursday's two-year high of 110.82/83, on slightly higher importer dollar demand, currency dealers said. The rupee rose 3.07 percent in 2010.

FACTORS TO WATCH:

Rupee appreciation this year as the central bank plans to further relax exchange controls
If the central bank reverses its easing monetary policies to curb rising inflationary pressure
SEC moves to increase market liquidity. [ID:nL3E6N70AF]

source - www.reuters.com