COLOMBO, May 22 (Reuters) - Sri Lanka stocks ended steady on Thursday with foreign investors buying into the island nation's risky assets after sentiment was boosted by the central bank's decision to hold policy rates at multi-year lows.
The main stock index ended up 0.01 percent, or 0.85 points, at 6,290.17, after having dipped slightly during early trade.
Stockbrokers expect gains due to lower interest rates after the central bank kept key rates at multi-year lows on Tuesday for the fourth straight month, as expected.
The exchange witnessed a net foreign inflow of 150.2 million rupees ($1.15 million) on Thursday, extending year-to-date net foreign inflow to 1.49 billion rupees.
The day's turnover stood at 611.5 million rupees, less than this year's daily average of 1.03 billion.
Shares of leading fixed-line telephone operator Sri Lanka Telecom Plc rose 1.91 percent to 47.90 rupees.
Shares in Commercial Leasing and Finance PLC rose 2.63 percent to 3.90 rupees.
The market has been on a rising trend since mid-March as many investors were compelled to return to the stock market because low interest rates have made fixed-income assets less attractive, stockbrokers said.
However, analysts have raised concerns over sluggish economic growth due to lower credit growth and consumer spending.
Despite a multi-year low interest rate regime, data showed private sector credit grew 4.3 percent in March from a year earlier, the slowest expansion since May 2010, while imports in February fell 6.2 percent on the year.
On Monday, central bank Governor Ajith Nivard Cabraal said Sri Lanka's private sector credit growth would pick up to around 15 percent by the end of this year and continue to improve through 2016.
On Wednesday, the chief executive of the exchange, Rajeeva Bandaranaike, told Reuters that the bourse is struggling with lack of liquidity, and is trying to increase the free float of the shares it lists to attract foreign funds. ($1 = 130.3650 Sri Lanka rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)