Sri Lankan share prices rebounded Friday after falling sharply in recent days with brokers saying better company earnings and falling interest rates likely to bring buyers back to the market.
The All Share Price Index closed at 2,911.62, up 1.99 percent (56.80 points) while the Milanka Price
Index of more liquid stocks closed at 3,274.76, up 2.09 percent (67.03 points).Turnover was 358 million rupees, according to provisional Colombo Stock Exchange statistics.
Angelo Ranasinghe of Bartleet Mallory Stock Brokers said share prices rose almost across the board in most sectors of the bourse.
The market had fallen too much, too fast after peaking in October, he said.
"From that point the market had dropped almost 10 percent. It really created good opportunities for bargain hunters to come into the market. And given the sharp drop, a technical correction was also inevitable."
He said forced selling may have contributed to the sharp drop in the market in recent days.
"Undisciplined trading practices may have contributed to the down trend."
The fall in interest rates and improved company earnings, and the overall improved economic climate brought about by the end of the ethnic war, should attract more investors to equities.
"One of the key factors that'll drive the market is the fall in interest rates. It should attract more investors to come into the market and existing investor to invest more in equities," Ranasinghe said.
The fall in the cost of borrowing could also encourage more margin trading by investors using borrowed funds.
Ranasinghe said he believed investors should not be concerned by talk of elections next year, noting that a regime change was unlikely and were it to happen, the new government was also likely to be investor-friendly.
SC Securities said in a market report Friday's gains were not enough to wipe out the losses made in the preceding days of the week.
The ASPI lost 2.19 percent (65.31 points) during the week.
The stock exchange saw a slight improvement in foreign participation during the week with foreign investors being net buyers.
The value of foreign purchases for the week was 425 million rupees compared with foreign sales of 209 million, with a net foreign inflow of 216 million rupees, they said.
Looks like CSE has come of age and like a rubber ball it will bounce back to higher performance.
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