Sri Lankan shares edged up to their highest close in more than eight weeks on Wednesday, a day after the country's parliament overwhelmingly approved some diluted reforms, but concerns over political stability remained. The parliament passed the reforms on Tuesday reducing some of the president's powers, in a move that did not go as far as President Maithripala Sirisena had promised but is nevertheless seen as a victory for the leader.
The main stock index ended up 0.55 percent at 7,173.37, its highest close since March 6. It has gained 3.95 percent since the central bank cut key rates on April 15, while yields on t-bills have fallen 41-51 basis points since then. "Market is up on positive sentiment but people will be a little wary till the elections are over," said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.
The day's turnover was 974.7 million rupees ($7.33 million), compared with this year's daily average of around 1.06 billion rupees. The market saw a net foreign inflow of 2.73 million rupees worth of shares on Wednesday, extending the net foreign inflow so far this year to 3.81 billion rupees.
Analysts said the market could be dull until the perception of political uncertainty is addressed and many investors were in a wait-and-watch mode before the parliamentary elections. Shares of Carson Cumberbatch Plc jumped 4.17 percent, while C T Holdings Plc rose 0.08 percent. The index lost 6.6 percent last month, its biggest monthly drop since October 2012, as investors sold holdings to settle margin trades amid concerns about political stability and a rise in interest rates.
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