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Monday, April 18, 2011

Sri Lanka shares slips from over 1-mo highs

* Foreign outflow hit near 3-wk high

* Inflation, monetary tightening weigh on sentiment

* Rupee flat on state bank dollar sales

COLOMBO, April 18 (Reuters) - Sri Lanka's stock market slipped on Monday from an over one-month high dragged by oil palm and diversified shares, with a large foreign outflow in the first day of trading since the central bank raised commercial banks' statutory reserve ratio.

The island's main share index was rangebound between 7,531.51 and 7,609.97 on the day, but closed 0.36 percent or 27.07 points weaker at 7,547.79. It hit a record closing high of 7,811.82 on Feb 14. Foreign outflow hit a near-three week high of 723.1 million rupees on Monday. Foreign investors have sold a net 7.5 billion in 2011, and a record 26.4 billion in 2010. Both the stock and money markets were closed from Wednesday for Sri Lanka's new year holidays. On Tuesday, after the markets closed, the central bank raised commercial banks' reserve requirement to 8 percent from 7 percent to try and ease potential demand-side inflation.

[ID:nL3E7FC255] Large cap oil palm firm Bukit Darah fell 3.7 percent, while debutante Free Lanka Capital Holdings , which traded heavily in terms of turnover and volume, closed 14 percent higher than its offering price. The day's turnover was 2.4 billion Sri Lanka rupees ($21.5 million), in line with last year's average of 2.4 billion and less than this year's daily average of 3 billion.

The bourse is still Asia's best performer in 2011 with a 13.7 percent gain, after bringing in the region's top return, 96 percent, last year. Traded volume was 111.3 million, against a five-day average of 52.4 million shares. The 30-day and 90-day average trading

volumes were 52.4 million and 67.1 million, respectively.

Last year's daily average volume was 67.9 million. The rupee closed flat at 110.38/40 a dollar as a state bank, through which the central bank directs the market, sold at 110.40, the upper end of the trading band, amid heavy importer dollar demand, dealers said.

FACTORS TO WATCH: -

-If central bank's monetary tightening signal shifts funds to fixed assets from the bourse

- If Sri Lanka can achieve an 8.5 pct growth target amid rising global oil price and inflation

- March-quarter corporate results

source - http://www.reuters.com/