Sri Lanka shares recover after election announcement

Colombo stock market

Sri Lankan shares recovered on Monday from a near 2-1/2 month low hit in the previous session after President Maithripala Sirisena dissolved parliament and announced elections, but trading volume slumped due to the political uncertainty.

Sirisena dissolved the parliament on Friday and scheduled the elections for Aug. 17, in an effort to consolidate power and push through political reforms, ending a months-long deadlock.

The main stock index ended 0.23 percent, or 15.95 points, higher at 7,032.15, recovering from its lowest close since April 15 hit on Friday.

The day’s turnover was 394.3 million rupees ($3 million), just over a third of this year’s daily average of 1.07 billion rupees.

“There is uncertainty over who is going to win the election and if there will be political stability after the election,” a stockbroker said on condition of anonymity.

“So there will be volatility until the elections are over. Possible split in Sirisena’s own party and predictions over a Prime Minister-led ruling party not getting a majority in the parliament are some concerns at the moment.”

The market saw net foreign inflow of 26.3 million rupees on Monday, after suffering net outflows of 4.09 billion rupees over the past 23 sessions through Friday.

Top mobile phone operator Dialog Axiata edged up 0.2 percent, while fixed line operator Sri Lanka Telecom ended 0.5 percent firmer.

The market shrugged of the central bank’s key monetary policy decision announcement as there were no surprises, traders said. ($1 = 133.7000 Sri Lankan rupees)