Sri Lankan shares down for second day; Lanka IOC drags
COLOMBO, May 27 (Reuters) – Sri Lankan shares fell for a second session on Wednesday led by Lanka IOC after its poor performance in the March quarter, and also on foreign outflows, stockbrokers said.
However, most investors have been cautiously optimistic on the island nation’s risky assets due to a lack of clarity on the political front and the timing of a parliamentary election as concerns over stability weighed on sentiment.
The main stock index ended down 0.11 percent at 7,253.50, the lowest close since May 14.
"The index will be moving zig-zag until you see some kind of positive news on political stability," a stockbroker said.
Political uncertainty due to the Ranil Wickremesinghe-led government not having a majority has been a drag on the market, though the trend reversed after the central bank cut key monetary policy rates to record lows on April 15.
The index has gained 5.2 percent since the rate cut.
Analysts say a new stable government after the election coupled with strong economic measures would boost confidence.
Foreign investors sold a net 482.3 million rupees ($3.60 million) worth of shares on Wednesday. But the bourse has seen net foreign inflows of 5.09 billion rupees in equities so far this year.
Turnover was 1.49 billion rupees, more than this year’s daily average of about 1.13 billion rupees.
Lanka IOC, which last week posted a 1.06 billion rupee loss in the March quarter compared to a profit of 722.8 million rupees in the same period last year, fell 5.97 percent to 29.90 rupees, its lowest close since Nov. 28, 2013.
Stockbrokers said they had been expecting a better performance from Lanka IOC during the March quarter.
Analysts expect banking and financial shares to gain due to rising private sector credit growth, which grew 13.9 percent on-year in March from 12.6 percent in February.