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Sri Lanka stocks close up 0.14-pct

March 08, 2013 (LBO) - Sri Lanka’s stock closed up for the third straight day, with index heavy John Keells and banks extending gains, though some profit taking was coming in, brokers said.

Lending rates are now high due to heavy government borrowing to finance excessive spending including the hiring of unemployed graduates in a midst of a downturn which ordinary people are finding to it difficult to finance through taxes.

Last week the state upped taxes on potatoes. But a hike electricity prices is expected to ease borrowing pressure somewhat in the coming months, contributing to economic stability.

Some companies which are facing higher power costs may eventually see interest costs coming down, if the government manages finances tightly, analysts say.

Commercial Bank of Ceylon which closed up 20 cents at 118.70 rupees, brokers said.

The index had gained 3.1 percent adding 75 billion rupees to stock values over the past three days.

Hatton National Bank closed at 171.00 rupees up 1.00 rupees, DFCC Bank gained 1.10 rupees to close at 151.20 rupees. Sampath Bank closed at 225.50 rupees up 3.40 rupees, showing there was still demand for banks.

Pan Asia closed at 22.30 rupees up 1.30 rupees. Union Bank of Colombo closed at 18.90 rupees down 0.40 rupees.

Commercial Leasing and Finance lost 0.20 rupees to close at 4.70 rupees

Nestle Lanka closed at 1865.00 rupees down by 15.10 rupees, Ceylon Tobacco Company closed flat at 825.00 rupees and Dialog Axiata closed flat at 9.70 rupees.

Distilleries Company of Sri Lanka closed at 180.60 rupees down 80 cents. The Lion Brewery Ceylon closed flat at 370.00 rupees.

Aitken Spence closed at 137.40 down 0.90 rupees, following strong gains Tuesday.

Asiri Hospital Holdings sold 5 million shares at 15.50 rupees per share to closed flat at 15.50 rupees.

Vallibel One, which bought into Lanka Ceramics group two days ago gained 20 cents to close at 21.60 rupees.

Lanka Ceramic closed flat at 120.00 rupees, Royal Ceramic Closed at 107.30 rupees up 3.30 rupees, Lanka Wall Tiles gained 0.50 rupees to close at 65.50 rupees and Lanka Floor Tiles closed at 70.00 rupees down 0.20 rupees

The benchmark Colombo All Share Index closed 8.42 points higher at 6,210.10 up 0.14 percent and the S&P SL 20 Index closed 09.35 points higher at 3,521.30 up 0.27 percent.

Turnover was 1.46 billion rupees up from 1.38 billion rupees a day earlier.

In intra-day trade the market faltered falling more than 50 points in a sell-off before recovering.

Foreign investors also sold 400 million rupees of stock and bought 308 million being net sellers by 92 million rupees in a day that 107 stocks declined with 97 advanced, indicating that profit taking was coming in after a week of strong gains.

But foreigners were still buying into companies like John Keells Holdings which gained 5.40 rupees to close at 269.90 rupees helping the market end in positive territory, brokers said.

John Keells is now valued high in terms of price to earnings multiples, which some brokers say is overbought but the stock has a liquidity premium which makes it attractive to foreign buyers.

Investors are expecting a rate cut from the Central Bank in its next monetary policy announcement.

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