Stocks recover on foreign buying, hopes of falling rate

REUTERS: Shares recovered yesterday from a three-week closing low hit in the previous session, gaining for the first time in six sessions on foreign buying in blue chips and hopes of interest rates falling further after the central bank comments.

The island nation’s Central Bank Governor on last Friday said the monetary authority is to issue guidelines to direct banks to cut lending rates and narrow the gap with the inflation rate, after it kept the key policy rates unchanged.

“Expectations of market interest rates falling further boosted sentiment,” a stockbroker told on condition of anonymity. “We expect the market lending rates to fall from this week despite the central bank holding the rates flat.”

The main stock index rose 0.54 percent, or 33.85 points, to 6,341.28, edging up from its lowest close since May 16.

Foreign investors were net buyers of shares for a 22nd straight session. The bourse saw a net foreign inflow of Rs.357.6 million, extending the year-to-date inflows to Rs.15.96 billion.

They accounted for around 56.92 percent of the day’s turnover of Rs.825.9 million, less than this year’s daily average of Rs.1.04 billion.

Shares in conglomerate John Keells Holdings rose 2.94 percent to Rs.272.80.

The rupee ended weaker at 126.55/60 per dollar from Friday’s close of 126.45/50 on demand for greenbacks from importers, dealers said.