Sri Lanka’s main stock index rose 0.9 per cent to a near four-year high on Monday before surrendering all gains due to profit-taking amid political uncertainty as investors awaited President Maithripala Sirisena’s economic policies.
The main stock index rose to 7,670.98, its highest since March 2011, before retreating 0.42 per cent or 32.14 points to 7,573.65 by 0721 GMT. It had hit its highest close since March 2011 on Friday.
“There was some profit-taking and investors are waiting to see the direction with the political uncertainty,’’ said Dimantha Mathew, manager research, at First Capital Equities (Pvt) Ltd.
Former President Mahinda Rajapaksa lost his bid for a third term on Friday, ending a decade of rule that critics say had become increasingly authoritarian and marred by nepotism and corruption.
After the election, leader of the pro-business opposition United National Party, Ranil Wickremesinghe, was appointed Prime Minister.
Rajapaksa’s coalition still has a majority in Parliament, but many of its lawmakers have pledged to back Sirisena.
Sirisena’s coalition has promised a 100-day programme to restore democracy and the economy before he dissolves Parliament for a general election after April 23.
Analysts said the political uncertainty over Sirisena’s coalition could weigh on the markets until he wins majority in the 225-member Parliament.
The stock market turnover on Monday was at 2.17 billion rupees ($16.54 million), boosted by block deals, dealers said.
The index gained 23.4 per cent in 2014 after rising 4.8 per cent in the previous year. It has lost 3.5 per cent since November 19 when Rajapaksa said he would hold a snap presidential election on January 8.
Rupee forwards traded a tad firmer on inward remittances, but trading was dull, dealers said.
Four-day forwards, which were actively traded, were at 132.70/80 per dollar, compared with Friday’s close of 132.75/85, dealers said.
The Sirisena administration has said it will do an audit on macroeconomic numbers and reveal whether there was any manipulation during the Rajapaksa regime.
Rupee forwards were maintained around 132.00 in December as the central bank defended the currency through moral suasion. ($1 = 131.2000 Sri Lankan rupees)