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Sri Lanka shares slip from record high on profit taking

[Reuters, Tuesday, 27 April 2010 16:45 No Comment]

Sri Lanka’s shares slipped on Tuesday, snapping a six-day record streak as foreign and institutional investors booked profits in high trading volumes.

The All-Share Price Index .CSE of the Colombo Stock Exchange fell 0.04 percent or 1.59 points to 4134.46. It hit a new all-time high of 4,161.56 points on Monday.

"A layer of profit-taking seen in the market which brought the index marginally down on high turnover," said Prasanna Chandrasekera, associate director at Asia Securities in Colombo.

Analysts said despite Tuesday’s marginal fall, the market would continue to move up with earning expectations and better economic development despite delay in the budget.

The newly-elected Sri Lankan government has said the 2010 budget will be delayed until July. [ID:nSGE63M0HV]

Investors had been expecting the government to come up with long-needed fiscal reforms to improve the investment climate. For Sri Lanka’s key political risks, see [ID:nRISKLK]

Traders said low interest rates kept turnover up.

Yield in Sri Lanka’s benchmark 91-day T-bills fell 6 basis points to a near five-week low of 8.40 percent at a weekly auction on Wednesday while 364-day T-bill yield fell to an over four months high of 9.30 percent, the central bank data showed.

Sri Lanka’s economic expansion is likely to be more than the 6.5 percent forecast this year due to rapid growth in infrastructure development and tourism, the central bank governor said on Thursday, after keeping key policy rates unchanged at multi-year lows. [ID:nSGE63L0HO] [ID:nSGE63L02S]

The day’s turnover was 2.04 billion rupees ($17.9 million), well above thrice the 2009 average of 593.6 million rupees.

Foreign investors sold a net 562 million rupees’ worth of shares, data showed. They have sold a net of around 15.7 billion rupees’ ($138.3 million) worth of shares this year.

Top listed private lender Commercial Bank of Ceylon COMB.CM closed 1.6 percent weaker at 241.25 rupees a share while shares in Ceylon Tobacco Company CTC.CM fell 1.67 percent to 310 rupees a share.

The bourse is up 22.1 percent so far this year, making it Asia’s best-performing market.

The market has shot up over 178 percent since it hit a four-year low on Dec. 30, 2008, rising in anticipation of the end of a 25-year war. That came in May and then an IMF loan in July helped boost investor confidence. The rupee currency LKR= closed firmer at 113.86/88 per dollar from Monday’s close of 113.93/95 as a state bank, though which the central bank drives the market, reduced its dollar trading band by 5 cents to 113.50/90, currency dealers said.

Dealers said yields of T-bonds maturing in 2013 and 2014 dropped by around 30 basis points with heavy buying on low inflationary expectations after the central bank’s policy rates were kept steady last week.

The markets will be closed on Wednesday to mark a Buddhist religious holiday. Normal trading will resume on Thursday.

[Full Coverage]

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