COLOMBO, Jan 4 (Reuters) - Sri Lankan shares ended slightly weaker on Thursday amid heavy buying by foreign investors, but traders said sentiment was likely to remain positive after the central bank kept key policy rates unchanged last week.
The Colombo Stock Index ended 0.06 percent weaker at 6,459.66, snapping an eight-session win streak.
Shares in Ceylon Tobacco Company Plc fell 1.3 percent, while DFCC Bank Plc dropped 2.9 percent.
Losses were, however, capped by gains in Melstacorp Ltd , which climbed 1.9 percent, and conglomerate John Keells Holdings Plc, which rose 0.3 percent.
“Small volume of selling in CTC dragged the market down,” said Dimantha Mathew, head of research at First Capital Holdings.
“The positive trend due to declining market interest rates will continue.”
Turnover stood at 1.5 billion rupees ($9.77 million), more than last year’s daily average of 915.3 million rupees.
Foreign investors net bought shares worth 1.3 billion rupees on Thursday. Foreign investors net bought 18.5 billion rupees worth equities in 2017, and 633.5 million rupees worth stocks in 2016.
The index rose 2.26 percent in 2017, posting its first annual increase in three years. It fell 9.7 percent in 2016.
Since March 2017, treasury bill rates have fallen between 188 and 216 basis points though end-December, mainly driven by foreign investors buying treasury bonds, resulting in declining market interest rates.
The country’s 2018 economic growth trajectory is likely to help boost market sentiment, analysts said.
Sri Lanka’s economic growth in 2018 is forecast at 5-5.5 percent, bouncing back from an anticipated four-year low of less than 4 percent last year, central bank Governor Indrajit Coomaraswamy said on Wednesday. ($1 = 153.6000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)