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Friday, July 29, 2011

Sri Lanka stx at 3-week high on earning hopes; margin easing rumour

* Index up on high turnover, volume on hopes of SEC rule change

* Foreign outflow at 407.6 million rupees

* Rupee firmer, ending nine straight sessions

COLOMBO, July 29 (Reuters) - Sri Lanka's bourse jumped 2.9 percent on Friday to a three-week high on high turnover andvolumes, sparked by hopes of good quarterly earnings and rumours the Securities and Exchange Commission (SEC) may roll back plans to end margin trading.

The SEC after market hours on Friday said it had not received any proposal from brokers to ease the margin phase-out and other regulations, as numerous brokers have anonymously said.

The main share index gained 2.9 percent or 191.81 points to 6,845.38, highest since July 8. It fell to a
seven-month low on Monday to the oversold region, making some stocks attractive. The 14-day Relative Strength Index shot up to 54.13 from Wednesday's 42.32, well above the oversold level of 30, Thomsonreuters data showed.

But foreign investors were net sellers of 407.6 million rupees worth of shares on Friday bring in the weeks outflow to 531.7 million rupees. They have sold 8.24 billion rupees in 2011 after a record outflow of 26.4 billion in 2010.

The bourse is up 0.28 percent for July but the index has shed 7.33 percent since June 1, mainly due to forced selling to meet the margin deadline. Analysts said they expect at least 10 percent quarter-on-quarter growth and 40 percent year-on-year in the overall June quarter earnings.

The day's turnover was 3.15 billion Sri Lanka rupees ($28.8 million), well above last year's average of 2.4 billion and this year's 2.7 billion. Friday's total volume was 102.6 million against the bourse'five-day average of 110.9 million. The 30-day and 90-day average trading volumes were 92.4 million and 106.4 million,
respectively. Last year's daily average was 67.9 million.

The bourse is up 3.16 percent so far this year, after being Asia's best performer in 2009 and 2010, with 124 percent and 96 percent respectively due to optimism over the economy after the end of a 25-year war in May 2009. The rupee ended firmer at 109.47/50 a dollar from Thursday's close of 109.49/50 on heavy dollar conversions including $500 million by the Central bank, which was exchanging proceeds from last week's $1 billion eurobond sale.

FACTORS TO WATCH:

- June quarter earnings of listed firms

- If foreign investors buy shares in large volumes.

- The extent of the rupee's appreciation.

source - www.reuters.com