Sri Lanka's stock market edged up on Monday on high retail investors buying amid concerns over a force-selling directive by the Securities and Exchange Commission (SEC) to recover credit with effect from January 1. The island's main share index rose 0.33 percent, or 22.09 points, to 6,657.96, its highest close since November 4.
It was the Asia's best performer last year and in 2009, with 96 percent and 125 percent rises respectively, mainly on economic optimism after the end of a 25-year civil war in May 2009. Monday's turnover was 2 billion rupees ($17.8 million) - less than 2010 daily average of 2.4 billion rupees. The SEC on Thursday said it had directed the bourse to mandate stockbrokers to force-sell if buyers do not settle credit within three days of the deal with effect from January 1.
Foreign investors sold a net 57 million rupees worth shares, after selling 26.4 billion rupees last year on a net basis. The bourse is trading at a forward price-to-earnings ratio of 17.5, the highest among emerging markets, compared with 13.1 of Asian markets and 12.2 of global emerging markets, Thomson Reuters StarMine data showed. The CSE's 14-day relative strength index is at 63.7, towards overbought or the upper neutral limit of 70.
On Monday, 47.5 million shares changed hands, as against five- and 30-day average of 50.8 million and 53.4 million, respectively. The 90-day average volume is 63.5 million. In 2009, daily average volume was 19.8 million. Sri Lanka's rupee ended flat at 110.92/95 a dollar in sluggish trade, currency dealers said. It rose 3.07 percent in 2010.
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