Sri Lankan stocks edged higher on Monday on retail buying in small counters but most blue chips were lacklustre, with institutional investors worried over the economy and a lack of progress in the island's peace process.
The key Colombo all-share index ended up 0.18 percent, or 2.30 points, at 1,298.85, but the Milanka index of the most highly capitalised stocks fell 0.45 percent, or 8.68 points, to 1,929.62.
Turnover was 110.9 million rupees, with scant foreign activity.
"The big-cap stocks are going to fall. The market needs some consolidation and there are concerns with respect to the peace process and what is going to happen on fiscal policy," said a broker at Asia Securities.
The new government, elected in early April, and the Tamil Tiger rebels have been unable to agree an aagenda to restart peace talks to end 20 years of civil war.
There are also uncertainties over economic policy, with the left-leaning minority government yet to unveil its economic programme and grappling with subsidies on local fuel prices as global oil prices remain high.
Blue chip conglomerate John Keells Holdings Ltd held flat at 97.50 rupees, while long-term lender National Development Bank Ltd fell 1.71 percent, or 2.50 rupees, to 144 rupees.
But small stocks lifted the broader market, with Ceylon Investment Co Ltd surging 62 percent, or 105.25 rupees, to 275 rupees after offering a one-for-two bonus issue, and sugar and spice distributor C.W. Mackie and Co Ltd gaining 35.19 percent, or 4.75 rupees, to 18.25 rupees.
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