REUTERS: Sri Lankan shares rose to a more than two-month high yesterday due to local buying in large-caps, while foreign investors exited from risky assets.
The main stock index rose 0.32 percent to 7,202.11, its highest closing level since March 4. It has gained 4.36 percent since the Central Bank cut key rates on April 15, while yields on t-bills have fallen 40-50 basis points since then. “Confidence is slowly coming into the market after the passing of the 19th Amendment and expected good earnings,” said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.
Sri Lanka’s parliament passed reforms last week to reduce some of the president’s powers, although they were far fewer than President Maithripala Sirisena had promised.
The passage of constitutional reforms that would help establish independent bodies for good governance also buoyed the market, analysts said. Concerns, however, remain over political stability.
The market saw a net foreign outflow of Rs. 28.6 million ($214,876) from equities yesterday. Foreign investors have bought a net Rs.3.72 billion worth of shares so far this year.
Turnover stood at Rs.1.11 billion, the highest since April 16 and more than this year’s daily average of around Rs.1.06 billion. Analysts said the market could be dull until the perception of political uncertainty is addreased and many investors would be in a wait-and-watch mode before the parliamentary elections. Shares of Distillers Co of Sri Lanka Plc rose 2.1 percent, while Ceylon Tobacco Co Plc gained 0.7 percent.