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Thursday, August 25, 2011

Sri Lanka shares up on foreign buying; rupee flat

* Foreign buying on John Keels pushes index up

* Foreign funds net buyers of 62.5 mln rupees

* Rupee flat despite heavy importer dlr demand

COLOMBO, Aug 25 (Reuters) - Sri Lanka's stock market recovered on Thursday, gaining from a two-week low as foreign investors snapped up market heavyweight John Keells Holdings amid continued retail selling due to a lack of liquidity.

The island nation's main share index edged up 0.39 percent or 26.49 points to 6,839.20, its first rise in six
straight sessions. It is the third-best performer in Asia with a return of 3.06 percent on the year.

The bourse enjoyed a foreign fund inflow of 62.5 million rupees on Thursday, but thus far in 2011, offshore investors have sold 10.45 billion, and in 2010 a record 26.4 billion.

Conglomerate John Keells rose 3 percent as mainly foreign investors bought it, stockbrokers said.

The day's turnover was 1.62 billion Sri Lanka rupees ($14.7 million), well below last year's average of 2.4 billion and this year's 2.7 billion.

After the end of a long civil war, Sri Lanka's bourse turned into Asia's best performer in 2009 and 2010, gaining 124 percent and 96 percent, respectively, but has touched negative on-the-year territory this year.

Thursday's total volume was 63.9 million, against a five-day average of 82.9 million. The 30-day and 90-day average trading volumes were 97.3 million and 116.7 million. Last year's daily average was 67.9 million.

On Thursday, global stocks edged up from this month's 11-month low while gold fell sharply as investors took an optimistic view of how strongly the Federal Reserve will commit to supporting the economy at a gathering this week.

The rupee ended flat at 110.00 a dollar, despite heavy importer dollar demand as a state bank, through which the central bank directs the market, protected the currency by selling it at 110, dealers said.

FACTORS TO WATCH:

Whether:

- Retail investors continue buying shares

- Foreign investors buy shares in large volumes

- Rupee will rise after the cenbank relaxed tough FX controls

source - www.reuters.com