September 18, 2014 / 12:36 PM / 3 years ago

Sri Lanka stocks at over-3-year high; more gains seen

COLOMBO, Sept 18 (Reuters) - Sri Lankan stocks closed at their highest in more than three years on Thursday led by large-caps on improved sentiment due to lower interest rates, higher foreign buying and a positive economic outlook.

Stockbrokers said they expected the index to gain further.

The main stock index ended up 0.39 percent, or 27.70 points, at 7,206.90, its highest close since June 10, 2011.

“There is a lot of buying demand. Sellers are hiding until they get a premium price,” said Jaliya Wijeratne, CEO at First Capital Equities (Pvt) Ltd. “We expect the index to gain further due to lower interest rates and positive outlook.”

Institutional investors were very active on Thursday, while retail participation was also high due to an optimistic outlook, analysts said.

The cut in energy prices on Tuesday also enthused the market.

Sri Lanka is aiming for a higher economic growth of 8.2 percent and a lower fiscal deficit target of 4.4 percent of gross domestic product next year, a government document showed on Thursday.

Yields on treasury bills fell 3-4 basis points at a weekly auction on Wednesday.

The index has gained 21.89 percent so far this year.

The bourse has been in an overbought region since July. The Relative Strength Index, a momentum indicator tracked by chartists, rose to 81.562 on Thursday compared with Wednesday’s 80.087, Thomson Reuters data showed.

Shares in Ceylon Tobacco Company, which led the overall gain in the index, rose 0.85 percent to 1,180 rupees, while large-cap Nestle Lanka Plc rose 1.03 percent to 2,100.10 rupees.

The day’s turnover was 2.9 billion rupees ($22.26 million), more than this year’s daily average of over 1.25 billion rupees.

Foreign investors were net buyers of 29 million rupees worth of shares on Thursday, extending the year-to-date net foreign buyers of 10.91 billion rupees. (1 US dollar = 130.2600 Sri Lankan rupees) (Reporting by Shihar Aneez; Editing by Sunil Nair)

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