Sri Lankan stocks hit a 33-month high on Monday as investors bought beverage and banking sector shares, while lower interest rates and continued foreign buying after the central bank left policy rates steady also helped. The central bank kept policy rates steady at multi-year lows for a sixth straight month, as expected, despite private sector credit growth slowing to a 4-1/2 year low.
The main stock index rose 0.56 percent, or 37.63 points, to 6,699.03, its highest close since October 5, 2011. The index is in overbought region since July 3 and the index has gained 5.02 percent so far this month, Thomson Reuters data showed. "Investors are looking at good investment opportunities with the low interest rates," said Reshan Kurukulasuriya, COO of Richard Peiris Securities.
Turnover was 597.2 million rupees ($4.6 million), half of this year's daily average of around 1.08 billion rupees. Analysts see room for gains with a P/E ratio of around 14.5 and resistance level at 7,000. Monday's gains were led by shares of Lion Brewery (Ceylon) Plc, which rose 14.97 percent to 684.2 rupees, while Ceylon Brewery Holdings Plc gained 2.94 percent to close at 672.30 rupees. Ceylinco Insurance Plc rose 4.09 percent to 1,400 rupees. Lower interest rates have prompted local investors to buy shares and shift their savings from unattractive fixed assets, analysts said, as yields on treasury bills edged down further at a weekly auction on Wednesday.
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