Shares down to near 5-week low ahead of holiday

Reuters: Shares ended near a five-week low in thin trade on Monday ahead of a public holiday, while political uncertainty before a Parliament election announcement dented sentiment.

The main stock index fell 0.35% to close at 7,195.19, its lowest finish since 30 April.

“It is a sandwich Monday. So some investors are on holiday,” said a stockbroker on condition of anonymity.

Both the stock and currency markets will be closed for a Buddhist religious holiday on Tuesday. Markets will resume trading on Wednesday.

Foreign investors were net buyers for the first time in five sessions. They bought a net Rs. 39.9 million worth of shares on Monday, after having sold Rs. 1.49 billion in the previous four sessions. The Bourse has seen net inflows of Rs. 4.49 billion in equities so far this year.

Despite political uncertainty, stockbrokers said better corporate earnings would help the market gain in the future despite the Parliament election this year.

“We don’t see any major dip in performance,” the stockbroker said.

Turnover was Rs. 730.8 million ($5.5 million), well below this year’s daily average of about Rs. 1.13 billion.

Political uncertainty due to the Ranil Wickremesinghe-led Government not having a majority has been a drag on the market, though the trend reversed after the Central Bank cut key monetary policy rates to record lows on 15 April.

The index has gained 4.3% since the rate cut.

Market heavyweight John Keells Holdings fell 0.51%, while large-cap Nestle Lanka NEST.CM fell 2.32%, dragging the overall index.

President Maithripala Sirisena’s Government has said it would dissolve Parliament once some crucial reform bills are passed. But it has not scheduled a date for the election.

Analysts say investors are hoping for a stable government after the election coupled with strong economic measures would boost confidence.