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Tuesday, April 5, 2011

Sri Lanka stx flat near 3-week high; rupee flat

* Foreign investors net buyers for fourth session

* Inflation worries; credit shortage hurt volumes, sentiment

* Rupee flat for ninth straight session

COLOMBO, April 5 (Reuters) - Sri Lanka's stock market inched down on Tuesday as retail investors booked profits in low volumes ahead of the festival season but offshore investors bought in for a fourth straight session.

The island's main share index closed 0.03 percent or 1.85 points weaker at 7,371.29, down from its highest since March 11. It hit a record closing high of 7,811.82 on Feb 14.

The International Monetary Fund approved disbursement of the seventh tranche of a $2.6 billion loan to Sri Lanka, saying the island's economic growth was strong while warning of the risk that excess liquidity could stoke inflation.[ID:nL3E7F505G]

Analysts said worries over inflation may hurt the market with a possible supply disruption due to ongoing turmoil in the Middle East and North Africa.

The day's turnover was at 2.1 billion Sri Lanka rupees ($19 million), less than last year's average of 2.4 billion rupees and well below this year's daily average is 3.1 billion rupees.

Foreign investors were net buyers of shares worth 92.7 million rupees on Tuesday, a fourth straight session. They have sold a net 6.8 billion in 2011, and a record 26.4 billion in 2010.

The bourse is still Asia's best performer in 2011 with an 11.1 percent gain, after bringing in the region's best return of 96 percent last year.

Traded volume was 50.3 million, against a five-day average of 57.2 million shares. The 30-day and 90-day average trading volumes were 63.9 million and 68.4 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 15.5, one of the highest among emerging markets, compared with an average 12.6 in Asian markets and 11.8 for global emerging markets, Thomson Reuters StarMine data showed.

The rupee closed flat at 110.38/40 a dollar from Monday's close as a state bank which central bank directs the market bought the dollars despite importer dollar demand, dealers said.

FACTORS TO WATCH:

- Impact of the ongoing Middle East/North Africa turmoil on stocks and rupee

- Impact of rising inflation

- Impact of the January-March quarter corporate results

source - www.reuters.com