Stock market rebounds to over four-month closing high

Reuters - Sri Lankan shares rose on Monday to its highest close in more than four months, led by gains in large caps while traffic woes caused by a heavy downpour dented the trading session.

The benchmark stock index ended up 0.43% or 28.56 points, at 6,708.40, its highest close since 8 January.

However, the gains were also capped on concerns that the government’s move to increase the value added tax and impose new taxes, effective from 2 May, would hit the bottom line of many companies.

The island nation experienced a massive downpour in the weekend, resulting in flash floods and also landslide threats in almost 10 districts of Sri Lanka and caused heavy traffic in Colombo.

“There wasn’t much activity today mainly because of the heavy rain,” said First Capital Equities Ltd Head of Research Dimantha Mathew.

Shares of Nestle Lanka Plc ended up 2.65% while conglomerate Ceylon Tobacco Company Plc gained 1.29%.

Turnover was 565.3 million rupees ($3.87 million), below this year’s daily average of around 784.9 million rupees.

Foreign investors were net sellers of 50.4 million rupees worth of equities on Monday extending the year-to-date net foreign outflow to 3.93 billion rupees worth of shares.

The 14-day relative strength index, which is in an overbought region, stood at 83.127 on Monday, compared with Friday’s 81.757, according to Thomson Reuters data. A level of 70 and above indicates the market is overbought.