By Ranga Sirilal and Shihar Aneez COLOMBO, May 10 (Reuters) - Sri Lankan shares closed flat on Monday after rising to a near record high on profit taking as foreign investors sold a large volume of shares. The All-Share Price Index of the Colombo Stock Exchange ended just 0.03 percent down at 4,222.04 on late profit taking. It touched 4,255.06 during the trade, a little less than its record high of 4,260.11 points hit last Wednesday. "We expect the market to rise further as there are a number of better earnings yet to come," said Prasanna Chandrasekera, associate director at Asia Securities in Colombo. Heavy retail buying has driven the bourse's price-to-earning ratio to 20.85, bourse data showed, compared to around 11 percent a year ago when Sri Lanka ended a 25-year war last May. However, foreign investors sold a net 85 million rupees' ($74,710) in shares on Monday, data showed. They have sold a net of 16.5 billion rupees' worth of shares so far this year. Analysts said foreigners may wait for directions from disbursement of an International Monetary Fund (IMF) loan and the next budget. Investors had been expecting the government to come up with long-needed fiscal reforms to improve the investment climate, but the Treasury Secretary P.B. Jayasundera said on April 29 those changes would be introduced in the 2011 budget. The IMF urged the Sri Lankan government on Wednesday to speed up fiscal reforms if wants to get a multi-billion dollar loan back on track. The bourse is up 24.7 percent so far this year, making it Asia's best-performing market. Sri Lanka's top mobile phone operator Dialog Telekom , which, on Friday, reported a net profit of 705 million rupees from 1.87 billion rupees loss a year ago, rose 3 percent. Market heavyweight John Keells Holdings fell 1.7 percent to 185 rupees a share after a weekend paper said a port terminal in Colombo controlled by the company had claimed tax exemption though it has not fulfilled conditions for exemptions. The conglomerate said in a statement there has been a difference of opinion between its terminal business and the country's investment body on the interpretation of the investment agreement and Sri Lanka's exchange of controller had confirmed that the position taken by its business was correct. Traders said low interest rates kept turnover up. The day's turnover was 1.35 billion rupees, more than two times of the 2009 average of 593.6 million rupees. The market has shot up over 184 percent since it hit a four-year low on Dec. 30, 2008, rising in anticipation of the end of the country's 25 year war.
Following on the end of the war in May, came a loan from the IMF in July, which helped to boost investor confidence. The rupee closed up at 113.62/65 a dollar, compared to Friday's close of 113.70/75, as a state bank, through which the central bank directs the market, reduced its dollar trading band by 5 cents amid exporter dollar conversion, dealers said. It hit a 16-month high of 113.52 per dollar on Tuesday. The interbank lending rate or call money rate fell to 9.035 from Friday's 9.057 percent. For secondary market rates, please see. ($1=113.635 Sri Lanka Rupee) (Editing by Karen Foster) ((ranga.sirilal@thomsonreuters.com; +94-777-394-603; Reuters Messaging; ranga.sirilal.reuters.com@reuters.net)) Keywords: MARKETS SRILANKA/ (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.
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