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Friday, March 25, 2011

Sri Lanka stocks up on retail buying; rupee flat

* Financial and insurance shares rebound

* Distilleries buying in Pelawatte Sugar boosts turnover, volume

* Rupee kept steady despite importer dlr demand

COLOMBO, March 24 (Reuters) - Sri Lanka's stock market closed firmer on Thursday as retail investors snapped up investment trust shares as Distilleries Company of Sri Lanka buying in local sugar manufacturer Pelawatte Sugar boosted turnover.

The island's main share index closed 0.13 percent or 9.65 points firmer at 7,216.75. It hit a record closing high of 7,811.82 on Feb 14.

Local beverage firm Distilleries Company of Sri Lanka in a statement said one of its subsidiaries had acquired 47 percent or 40 million shares in Pelawatte Sugar at 27.50 rupees each, boosting the day's turnover and volume.

Analysts said investor sentiment has turned negative on move by Sri Lanka's Securities and Exchange Commission to end credit transactions by end-June and turmoil in oil-producing Middle Eastern and North African countries.

Oil rose on Thursday mainly on concerns over instability in the Middle East with May Brent rose 18 cents to $115.73 a barrel at 0919 GMT. U.S. crude was up 68 cents to $105.43.

Sri Lanka imports all its oil, so the crises in Libya and the Middle East mean the island nation's economy could get hit by soaring imported inflation and a loss of earnings from Sri Lankan expatriate workers and lower tea demand from the region.

The day's turnover was 2.8 billion Sri Lanka rupees ($25.4 million), more than last year's average of 2.4 billion rupees and less than this year's daily average of 3.3 billion.

Foreign investors were net sellers of 369 million rupees' worth of shares on Wednesday and have sold a net 6.1 billion in 2011, after selling a record net 26.4 billion in 2010.

The bourse is Asia's best performer so far in 2011 with an 8.8 percent gain, after bringing in the region's best return with 96 percent last year.

Traded share volume was 89.8 million, against a five-day average of 63 million. The 30-day and 90-day average trading volumes were 71 million and 68.2 million respectively. Last year's daily average volume was 67.9 million.

The bourse is trading at a forward price-to-earnings (P/E)ratio of 14.9, one of the highest among emerging markets, compared with 12.2 in Asian markets and 11.5 in global emerging markets, Thomson Reuters StarMine data showed.

The rupee closed steady for a third straight day at 110.38/40 a dollar despite severe importer dollar demand as a state bank sold dollars at a flat rate of 110.40, dealers said

source - www.reuters.com