Bourse recovers after election announcement

Reuters: Shares recovered on Monday from a near 2-1/2 month low hit in the previous session after President Maithripala Sirisena dissolved Parliament and announced elections, but trading volume slumped due to the political uncertainty.

Sirisena dissolved the Parliament on Friday and scheduled the elections for 17 August, in an effort to consolidate power and push through political reforms, ending a months-long deadlock.

The main stock index ended 0.23%, or 15.95 points, higher at 7,032.15, recovering from its lowest close since 15 April hit on Friday. The day’s turnover was Rs. 394.3 million ($ 3 million), just over a third of this year’s daily average of Rs. 1.07 billion.

“There is uncertainty over who is going to win the election and if there will be political stability after the election,” a stockbroker said on condition of anonymity.

“So there will be volatility until the elections are over. Possible split in Sirisena’s own party and predictions over a Prime Minister-led ruling party not getting a majority in the Parliament are some concerns at the moment.”

The market saw net foreign inflow of Rs. 26.3 million on Monday, after suffering net outflows of Rs. 4.09 billion over the past 23 sessions through Friday.

Top mobile phone operator Dialog Axiata edged up 0.2%, while fixed line operator Sri Lanka Telecom ended 0.5% firmer.The market shrugged off the Central Bank’s key monetary policy decision announcement as there were no surprises, traders said.