COLOMBO, Dec 18 (Reuters) - Sri Lankan stocks rose on Thursday for the first time in six sessions, with telecoms leading the recovery, but stockbrokers said gains may not be sustainable due to political worries ahead of the Jan. 8 presidential poll.
The main stock index ended 0.43 percent firmer at 7,230.52, recovering from its lowest close since Nov. 28 in the previous session.
Stockbrokers said the market rose due to some optimism after President Mahinda Rajapaksa and a few top government officials met leaders from the private sector at a forum on Wednesday to explain the government’s economic progress.
But brokers said the gains were not sustainable because there was no fundamental reason.
“The index will continue to move sideways until there is a clear direction from the election,” said a stockbroker.
Analysts said some institutional and high net worth investors were active, with turnover at 1.36 billion rupees, stock exchange data showed. That was slightly less than this year’s daily average of 1.42 billion rupees.
The bourse saw net foreign outflows of 74.4 million rupees this session, but net inflows so far this year stood at 21.7 billion rupees, exchange data showed.
Top mobile phone service provider Dialog Axiata gained 3.08 percent, while No. 1 fixed-line telephone operator Sri Lanka Telecom added 2.66 percent.
Trading is expected to be sluggish due to political uncertainty ahead of the presidential polls next month, with the index seen falling through December-end.
Political analysts see a tight race between President Mahinda Rajapaksa and his former health minister Mithripala Sirisena, the consensus candidate of a united opposition. Both candidates are yet to announce their policies.
Eleven legislators from Rajapaksa’s United People’s Freedom Alliance, including Sirisena, defected after he announced snap elections last month. Two opposition legislators have defected to Rajapaksa’s party.
Speculation over more defections also weighed on sentiment, analysts said. ($1 = 131.2000 Sri Lankan rupees) (Reporting by Shihar Aneez; Editing by Prateek Chatterjee)