Sri Lankan shares edge up; political woes hurt sentiment

Colombo stock market

Sri Lankan shares inched up on Monday, recovering from a two-month low hit in the previous session, led by large caps, but trading was choppy as political woes ahead of an announcement on parliamentary election date weighed on sentiment.

The main stock index ended up 0.06 percent at 7,039.65, edging up from its lowest close since April 15.

Turnover stood at 488.9 million rupees ($3.7 million), its lowest since June 10 and less than half of this year’s daily average of about 1.1 billion rupees.

“Investors are seriously looking for some kind of direction in politics either calling a parliamentary election or dissolution of the parliament,” a stockbroker said on condition of anonymity.

“Uncertainty is killing the market. Buyers are waiting for some news. If they see the date for the election, they can at least plan their investments accordingly,” the stockbroker said.

Foreigners are leaving because they want to reduce their exposure to the nation’s risky assets, he said.

The market saw a net foreign outflow of 51.2 million rupees on Monday, extending net foreign sales in the past 19 sessions to 3.47 billion rupees.

The bourse, however, has seen net inflows of 2.46 billion rupees into equities so far in 2015.

Investors were confused due to a lack of direction on interest rates, economic policies, and on the timing of the parliamentary election, analysts said.

President Sirisena’s government has said he would dissolve the parliament once some crucial reforms, including an electoral bill, are passed, but is yet to fix a date for the election.

Shares in large cap Nestle Lanka ended 6.17 percent higher, while market heavyweight John Keells Holdings gained 1.16 percent. ($1 = 133.9000 rupees)