REUTERS: Sri Lankan shares edged up to their highest close in seven weeks yesterday led by diversified shares, but volume was light as investors awaited cues from the political front ahead of a parliamentary vote on proposed constitutional reforms.
The main stock index ended up 0.13 percent at 7,134.43, its highest close since March 9. It has gained 3.38 percent since the Central Bank cut key rates on April 15, while yields on t-bills have fallen 41-51 basis points since then.
Investors have been cautious due to political uncertainty as Prime Minister Ranil Wickremesinghe’s party does not have a majority in parliament and President Maithripala Sirisena promised to dissolve parliament after the end of his 100-day programme on April 23.
The passage of reform measures, including establishing independent police, judiciary, and election and public service commissions, is seen as a test for Sirisena’s government.
“Market was volatile with continued upward trend, but investors are still waiting for a stable political framework,” said Reshan Wediwardana, research analyst at First Capital Equities (Pvt) Ltd.
Investors awaited the outcome of the vote on constitutional reforms which could help boost investor sentiment, dealers said.
The day’s turnover was Rs.756 million ($5.69 million), compared with this year’s daily average of around Rs.1.07 billion.
The market saw a net foreign inflow of Rs.21.2 million worth of shares yesterday, extending the net foreign inflow so far this year to Rs.3.8 billion.
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 Hemas Holdings Plc rose 0.39 percent, while Distilleries Company of Sri Lanka Plc gained 1.49 percent.
Some analysts said the markets would stay volatile until parliamentary elections are announced.
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.