Stock market near 7-month closing high; stability hopes help

Reuters: Shares rose more than 1% on Tuesday to end near their highest level in nearly seven months as hopes of political stability and improved corporate earnings in the April-June quarter boosted sentiment, brokers said. However, some foreign investors sold off the island nation’s risky assets.

The main stock index ended 1.1% up at 7,458.92, its highest close since 16 January. The gain helped raise the market capitalisation by Rs. 34.4 billion.

The bourse has gained 7.73% in a month through Tuesday.

“Market was very bullish. More institutional and high net worth buying lifted the turnover. It’s a buyers market and investors were going up and buying,” said Dimantha Mathew, a research manager at First Capital Equities Ltd.

Conglomerate John Keells Holding Plc jumped 1.62% while Distillers Company of Sri Lanka Plc gained 3.47%.

Dialog Axiata Plc rose 1.75% and Nestle Lanka Plc rose 1.80%.

The index has been gaining since 7 July on expectations that strong corporate earnings and political stability after the elections on 17 August would boost returns, analysts said.

Turnover stood at Rs. 2.61 billion ($ 19.52 million) on Tuesday, more than double this year’s daily average of Rs. 1.13 billion.

Foreign investors, however, sold a net Rs. 295.5 million worth equities while they have offloaded a net Rs. 490.7 million worth of shares so far this year.