Colombo Bourse rebounds on retail buying

Friday, 16 February 2018 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Shares recovered on Thursday, following two straight sessions of losses, on retail buying after the central bank held key policy rates steady amid signs political uncertainty was easing, dealers said.

The Central Bank’s decision was widely expected, with policymakers emphasising the need to support an economy that has been beset by production disruptions due to massive intermittent floods and prolonged drought last year.

The Colombo stock index ended 0.32% firmer at 6,553.21, hovering near its highest close since November hit on Friday.

The index gained 0.8% last week, its third straight weekly rise.

Shares in Melstacorp Ltd rose 2.8%, while Ceylinco Insurance Plc ended 6.7% higher and Aviva NDB Insurance Plc gained 25%. “Today, there was retail and high net-worth interest on insurance sector and it was mainly retail driven,” said Dimantha Mathew, head of research at First Capital Holdings.

“Foreign investors were worried with the continued political uncertainty and delaying to see some settlement will create more uncertainty in the market,” he said, referring to a decision that could end the political instability.

Analysts, however, said they see some positive signs as both the ruling coalition parties are in talks to end the political impasse, with President Maithripala Sirisena expected to make a statement possibly on Friday.

The ruling coalition government of Sirisena’s centre-left Sri Lanka Freedom Party and Prime Minister Ranil Wickremesinghe’s centre-right United National Party suffered defeats in a local election over the weekend.

Since the results, both parties have locked horns on how best to continue in the government.

Investors are waiting for some stability and to see where coalition partners are headed, analysts said.

Turnover stood at Rs. 878.1 million ($ 5.67 million), well below last year’s daily average of Rs. 915.3 million.

Foreign investors sold a net Rs. 2.3 million worth of shares on Thursday, but have been net buyers of Rs. 5.4 billion worth of equities so far this year.