Sri Lankan stocks rose on Monday amid heavy buying in Merchant Bank of Sri Lanka after the company announced plans to team up with a regional bank to strengthen its capital market operations, brokers said. The key Colombo all-share index rose a provisional 0.11 percent, or 1.98 points, to 1,733.05 points. The bourse hit its all-time closing high of 1,738.36 points on March 17.
Merchant Bank of Sri Lanka rose 30.91 percent to 36.00 rupees.
"Merchant Bank led the way today after they announced plans to tie-up with a regional bank for capital market operations," said Naren Godamunne, analyst at DFCC Stock Brokers.
Merchant Bank of Sri Lanka informed the Colombo bourse on Monday that it was "in the process of negotiating to sign a Memorandum of Understanding with a regional bank to strengthen and expand its capital market activities."
A senior company official said negotiations have not been concluded and therefore they cannot disclose the name of the party.
However a bank source told Reuters that Merchant Bank of Sri Lanka was talking to the State Bank of India's capital market unit.
The bourse was also boosted by small investor buys of second-tier shares hoping to sell later this week to gain quick profits, a trend brokers say will continue in the weeks to come.
Seylan Merchant Bank rose 6.67 percent to 16.00 rupees.
Ceylinco Seylan Developments rose 5.88 percent to 18.00 rupees.
"We saw this same trend in the last few weeks of retail domination of midcap shares looking for small gains," said Godamunne.
"This is good because it will keep the liquidity level up. However, blue chips have taken a back seat these days," he said.
The Milanka index - which tracks the most liquid and highly capitalised stocks - fell a provisional 0.12 percent, or 2.78 points, to 2,330.64 points.
The bourse has gained nearly 15 percent so far this year on corporate earnings and gains in the construction sector, which is seen benefiting from post-tsunami rebuilding.
Total market turnover was 458.71 million rupees with 25 million rupees of foreign purchases and 37 million rupees worth of foreign sales.
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