Sri Lankan shares down on profit-taking, foreign outflows
COLOMBO, May 26 (Reuters) – Sri Lankan shares fell on Tuesday due to foreign outflows and as investors took profits in stocks that had rallied since the central bank’s policy rate cut, stockbrokers said.
However, investors awaited 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 0.32 percent at 7,261.78, the lowest close since May 18.
"Investors are eagerly waiting for the announcement on the election and hope for a stable government," a stockbroker said on condition of anonymity.
Political uncertainty due to Prime Minister 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 5.3 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 370.7 million rupees worth of shares on Tuesday. But the bourse has seen net foreign inflows of 5.57 billion rupees in equities so far this year.
Turnover was 1.18 billion rupees ($8.8 million), just above this year’s daily average of about 1.13 billion rupees.
Carson Cumberbatch Plc lost 6.7 percent, while Ceylinco Insurance Plc fell 6.2 percent.
Shares of market heavyweight John Keells Holdings, which posted a 12 percent growth in its March quarter net profit, closed 0.1 percent up.
Keells announced a share split of seven subdivided into eight, the company said in a statement, boosting liquidity in the market.
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.