July 30, 2008 (LBO) – Sri Lankan stocks closed higher Wednesday driven up by gains in stocks with a heavy weighting on the indices and some renewed interest seen in plantations. But brokers said the upward momentum could be short-lived as economic conditions remained difficult given record inflation and high borrowing costs for companies.
The All Share Price Index gained 0.85 percent (20.44 points) to close at 2,429.14 while the more liquid Milanka went up 1.21 percent (34.69 points) to 2,901.49. Turnover was 228 million rupees.
“We saw some improvement in retail trading,” said Srimal Liyanage of Lanka Securities.
“There was more interest in plantations stocks like Kegalle, Kotagala, Watawala, Kelani Valley, Kahawatte and Hapugastenne which made gains today. There’s potential in plantations, in tea and especially rubber.”
Kegalle Plantations went up 5.39 percent to 63.50 rupees, Kotagala was up 3.64 percent to 57 rupees, Watawala rose 1.27 percent to 80 rupees and Kahawatte went up 3.12 percent to 33 rupees.
There was also some interest on LIOC although brokers said they do not see any change in the company’s performance.
“Maybe investors thought there could be some improvement as LIOC had reached an all-time low price level and wanted to make quick gain,” said a broker.
LIOC, which was the second most actively traded stock and most active in terms of volumes, closed up 5.13 percent at 20.50 rupees with over 1.1 million shares changing hands.
Nuwara Eliya Hotels Company was the top gainer for the day but brokers said the stock was illiquid and any sizeable quantity traded was likely to drive up the share price.
It went up 30.68 percent or 53 rupees to 519.50 with only 9,300 shares traded.
Liyanage said the day’s gains may be temporary as economic conditions had not changed and high inflation and interest rates were likely to affect corporate profitability.
John Keells Holdings closed flat at 100 rupees with 552,100 shares traded
Associated Motorways, which was taken over by a Dubai construction firm Monday, traded flat at 174.50 while its former controlling shareholder Associated Electrical Corporation gained 5.47 percent to 1,605.75.