Sri Lankan shares regain some ground, sentiment seen weak

June 05, 2008 (LBO) – Sri Lankan shares Thursday recovered some ground it lost the day before but on thin volumes with brokers saying the market is likely to remain weak given high inflation and interest rates. The All Share Price Index gained one percent (24.81 points) to end at 2,516.49 while the more liquid Milanka rose 1.31 percent (39.27 points) 3,029.85. Turnover was 148.8 million rupees.

Brokers said a few firms reported encouraging earnings growth recently but that overall sentiment would remain weak.

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“Earnings released for the last two days seem pretty positive,” said Nikita Tissera, manager research at SC Securities.

“But we don’t see too many reasons for investors to be suddenly bullish, with interest rates high and possibly heading higher.”

He said the weak sentiment in the market is likely to continue unless there was some positive news to revive it.

High interest rates are expected to affect investors trading on borrowed funds and could lead to margin calls.

Among the big trades was 2.1 million shares of Lanka IOC which however closed flat at 20.75 rupees.