Colombo stock market extends gains to 2-week closing high

Reuters: Shares rose for a fourth straight session on Friday and posted their highest close in two weeks as investors bought banking and diversified stocks, stockbrokers said.

But a lack of supportive news amid concerns over political uncertainty capped the upside, analysts said.

The Colombo stock index ended 0.32% higher at 6,138.08, its highest close since 29 June. It rose 0.5% this week, its first weekly gain in eight weeks.

“Market sustained its momentum. Local investors have got activated and they are buying on valuations,” said Softlogic Stockbrokers Deputy CEO Hussain Gani.

Turnover stood at Rs. 626 million ($ 3.92 million), less than this year’s daily average of Rs. 900.5 million. The benchmark stock index hit its lowest close since 30 March 2017 on 4 July, and has declined for 19 sessions in 26 through Friday. A downward revision in economic growth estimate by the Central Bank has hit sentiment, analysts said.

Economic growth in 2018 is likely to be between 4% and 4.5%, falling short of an earlier estimate of 5%, Central Bank Governor Indrajit Coomaraswamy told reporters last Friday, adding that the earlier estimate was “ambitious”.

Foreign investor net sold equities worth Rs. 4 million on Friday, extending the year-to-date net foreign sale to Rs. 2.4 billion.

Shares in Lion Brewery (Ceylon) Plc rose 8.9%, Nanda Investment Plc ended 12.4% higher, Cargills (Ceylon) Plc climbed 1.8% and conglomerate John Keells Holdings Plc gained 0.4%.

Investors are waiting for some positive news both on the economic and political front, said analysts, adding that the Government’s policy implementation had been sluggish since both main parties in the ruling coalition lost local polls in February.

The International Monetary Fund said on 20 June that Sri Lanka’s economy remained vulnerable to adverse shocks because of sizeable public debt and large refinancing needs.