Bourse dips below key barrier

Reuters: Shares ended at a 2-1/2 month low on Thursday, falling below a key psychological barrier of 7,000 points, led by banks and telecommunication shares as political uncertainty ahead of Parliamentary elections weighed on sentiment.

The main stock index ended 0.54% weaker at 6,982.80, its lowest close since 15 April.

The day’s turnover was Rs. 435.6 million ($3.26 million), well below this year’s daily average of Rs. 1.06 billion.

“We expect more volatility until the nominations are over and even after that the market will be sideways till the elections are over,” said Danushka Samarasinghe, Head of Research at Softlogic Securities.

President Maithripala Sirisena dissolved Parliament on Friday and scheduled elections for 17 August, in an effort to consolidate power and push through political reforms.

The deadline for the nominations is 13 July. Samarasinghe said the index falling below its psychological barrier of 7,000 could lead to a fresh round of selling, especially by small-time investors.

The market saw a net foreign outflow of Rs. 17.8 million on Thursday, after recording a net outflow of Rs. 4.17 billion over the past 26 sessions.

However, foreign investors are net buyers of Rs. 1.77 billion worth of shares so far this year.

Shares in DFCC Bank Plc fell 3.75%, while Sri Lanka Telecom Plc declined 1.81%.