COLOMBO: Sri Lankan stocks fell to a five-week closing low on Wednesday on concern over political stability ahead of the Jan. 8 presidential polls as a legislator from President Mahinda Rajapaksa's ruling party defected to join the main opposition United National Party.
Eight loyalists from Rajapaksa's United People's Freedom Alliance, including Health Minister Mithripala Sirisena, have defected since Rajapaksa called for the snap poll last week. Sirisena resigned to contest against Rajapaksa as the candidate of choice for a united opposition.
The main stock index ended 0.82 percent, or 59.64 points, down at 7,179.72, its lowest close since Oct. 21.
"There are confusing views on the elections. At the moment, it is not easy to say who is going to win unlike a week earlier when Rajapaksa was seen as the clear winner," a stockbroker said on condition of anonymity.
"With the crossovers, I think investors will wait until political stability returns." Continued foreign buying, low interest rates and hopes of better earnings pushed the bourse into the overbought zone by Nov. 18, before it slipped on political woes.
The bourse is near the oversold region since Friday, Thomson Reuters data showed.
Wednesday's turnover was 1.7 billion rupees ($12.97 million), exchange data showed, more than this year's daily average of 1.44 billion rupees.
Foreign investors were net buyers of 400.7 million rupees, extending foreign buying for this year to 19.8 billion rupees, exchange data showed.
Shares in Nestle Lanka Plc fell 2.2 percent, leading losses, while conglomerate John Keells Holdings Plc dropped 2.06 percent.
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