Sri Lanka shares down as foreign outflow continues - Reuters

COLOMBO, Jan 27 (Reuters) - Sri Lanka's stock market lost
on Thursday as retail investors booked profits after a recent
rally as foreign investors continued to be net sellers in an
overbought and expensive market.

* Bourse falls 0.42 pct on retail profit-taking
* Market sees foreign outflow for 6th straight session
* Rupee edges down on importer dollar demand 

Foreign investors sold a net 92.1 million rupees' worth
shares on Thursday and have sold a net 2.7 billion rupees so
far in 2011, after selling a record net 26.4 billion in 2010.

The island's main share index .CSE closed 0.42 percent or
30.76 points weaker at 7,211.11, its second fall this year. It
hit a record closing high of 7,261.37 on Monday after touching
a new intraday peak of 7,320.22 points.

It has been Asia's best performer with an 8.67 percent gain
in 2011 after being the top performer last year with a 96
percent return, but the recent retail buying has pushed it
deeper into the overbought region with a 14-day relative
strength index at around 80.

The bourse is trading at a forward price-to-earnings (P/E)
ratio of 18.1, highest among emerging markets, compared with
12.9 in Asian markets and 11.9 in global emerging markets,
Thomson Reuters StarMine data showed.

Analysts also said December quarterly earnings released so
far have yet to boost the market. On Thursday, market
heavyweight John Keells Holdings JKH.CM posted a 54 percent
rise in its December quarter profit and analysts said it was in
line with expectations. [ID:nSGE70Q02I]

Turnover on Thursday was 4.1 billion rupees ($37 million),
more than last year's daily average of 2.4 billion.

The traded share volume was 137.8 million against a
five-day average of 165.9 million. Last year's daily average
volume was 69.2 million.

The rupee LKR= closed weaker at 111.10/15 a dollar from
Wednesday's 111.05/111.15 on strong importer dollar demand,
traders said.

FACTORS TO WATCH:

- If December quarterly earnings boost the bourse

- Whether a technical correction will bring the bourse down

- If foreign funds buy shares in large volumes

 DATA

Colombo Stock Exchange:

Stock Market Volume (Shares)

Current Volume            Average Volume 90 Days

137,777,322                        73,028,477

Yield and Price of Sri Lanka's sovereign bonds:

Maturing year   Tenure    amount      Reuters
yield LK032736246=     2012       5-yr    $500 mln    
3.154-2.839 LK045930114=     2014       5-yr    $500 mln    
4.548-4.384 85227SAH9=RRPS   2020      10-yr  $1,000 mln   
6.1767-6.0392

* For Sri Lankan treasury securities benchmarks and data,
please click LKBMK= and LKCMTBMK=

* For interbank lending rate or call money rate CLIBOR or
CLIBOS

* For secondary market rates, please see <0#LKBMK=>.
 ($1=110.975 Sri Lankan rupees)
 (Reporting by Ranga Sirilal and Shihar Aneez; Editing by
Bryson Hull)