Stocks down; political uncertainty grows after fresh defections

defectsSri Lankan stocks traded weaker on Tuesday as fresh defections from the ruling party hit the sentiment, raising political uncertainty ahead of the presidential polls early next year.

The main stock index was down 0.3 per cent or 21.57 points at 7,230.00 at 0841 GMT.

“The sentiment is down due to defections yesterday,’’ a stockbroker said. “Going forward the market may be sluggish and weaker with more defections expected from the ruling party raising concerns over political stability.’’

After market hours on Monday, two ruling party legislators, including a cabinet minister, defected from President Mahinda Rajapaksa’s United People’s Freedom Alliance to join the Opposition camp.

With the latest defections, Rajapaksa has lost his two-thirds majority for the first time in more than four years. Thirteen legislators, including former health minister Maithripala Sirisena, who is challenging Rajapaksa’s bid for a third term as the consensus candidate of a united Opposition, have defected after the president announced snap elections last month. Two Opposition legislators have defected to the ruling party.

Turnover stood at 3.38 billion rupees ($25.78 million) due to some block deals, with 40.3 million shares changing hands.

Political analysts see a tight race between Rajapaksa and Sirisena, who in his policy announcement on Friday had said that he would eliminate rampant corruption and reduce the prices of essential goods and fuel by cutting taxes. Rajapaksa announced his policies on Tuesday and analysts said the market is yet to react to his manifesto.

In the forex market, four-day rupee forwards were steady at 131.99/132.05 per dollar at 0904 GMT with the central bank capping it at 132.00 through moral suasion, dealers said. (The Hindu)

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