Sri Lanka shares at 14-wk high on Telecom, rupee flat

COLOMBO, (Reuters) - Sri Lankan shares climbed to their highest close in 14 weeks on Tuesday, boosted by sharp gains in bourse heavyweight Sri Lanka Telecom, while the rupee closed flat, dealers said.

The Colombo All-Share index rose 1.13 percent, or 28.71 points, to 2,562.25 -- its highest close since Nov. 28.

It is also the first time since Jan. 3 that the bourse has been in positive territory, after sliding around 7.0 percent that month after the government formally scrapped a truce with the Tamil Tigers to the alarm of investors.

The market is now 0.85 percent firmer for the year to date. Shares in leading fixed line phone operator Sri Lanka Telecom, the market’s third most valuable share by market capitalisation, rose 5.8 percent to 36.50 rupees a share as calculated on a weighted average.

Traders said investors were expecting a court to allow a planned stake sale between Japan’s Nippon Telegraph and Telephone Corp and Global Telecommunications Holdings. An opposition politician is trying to block the sale.

“There was speculative buying of Sri Lanka Telecom pending the court case. Investors are expecting positive things to happen,” said Susil Fernando, an investment advisor at DFCC stock brokers.

Conglomerate John Keells Holdings closed 0.21 percent firmer at 120 rupees. Traders said perceived low prices after recent losses were enticing investors, who are also expecting a dividend payment.

Sri Lanka Telecom and John Keells accounted for over 45 percent of the day’s turnover between them.

Dialog Telekom, which accounts for a fifth of the market’s capitalisation, rose 1.41 percent to 18 rupees a share, in thin volume trade.

Market turnover was 502.24 million rupees ($4.66 million), more than last year’s average daily turnover of around 400 million rupees.

The rupee closed a shade firmer at 107.83/87 per dollar, compared to Monday’s 107.85/88.

Currency dealers said heavy exporter dollar sales had lifted the rupee to around 107.77 per dollar earlier in the day, but said a state bank bought dollars at 107.80 to 107.85 to avoid the rupee appreciating too strongly.

The rupee hit a 13-month high of 107.67/73 on Feb 1. “Exporters are expecting the rupee to appreciate further as the Central Bank is in the process of borrowing a $300 million syndicated loan,” said a currency dealer.

A senior Central Bank official said on Tuesday the bank’s board had decided to award the loan contract to at least one bank and possibly two, but gave no further details. The Central Bank will announce its final decision on Wednesday.

The Central Bank sold benchmark 91-day treasury bonds at a yield of 18.48 percent at a weekly auction on Tuesday, unchanged from last week.

The interbank call rate fell to 16.117 percent from Monday’s 16.207 percent and the Central Bank mopped up 7.02 billion rupees through open market operations.