Sri Lankan stocks recovered on Thursday, snapping a five-session losing streak, with high net worth and institutional investors trading actively.

However, political concerns ahead of the January 8 presidential poll weighed on sentiment.

The main stock index was up 0.4 per cent, or 29.57 points, at 7,229.30 at 0733 GMT, recovering from a three-week closing low in the previous session.

“There was some positive momentum after top government leaders met business leaders and professionals yesterday,’’ a stockbroker said on condition of anonymity.

President Mahinda Rajapaksa, his brother and Defence Secretary Gotabaya Rajapaksa and Central Bank Governor Ajith Nivard Cabraal met leaders from the private sector at a forum on Wednesday and explained the government’s economic progress.

The broker 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.’’

Analysts said some institutional and high net worth investors were active, boosting the turnover.

Turnover stood at 1.12 billion rupees ($8.55 million), with 50.1 million shares changing hands.

Political analysts see a tight race between Rajapaksa and former health minister Mithripala Sirisena, the consensus candidate of a united Opposition. Both candidates are yet to announce their policies and manifestoes.

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 the sentiment, analysts said.

In the forex market, four-day rupee forwards were steady at 131.99/132.05 per dollar at 0755 GMT as the central bank’s moral suasion kept the currency flat, despite dollar demand from importers, dealers said.

“There was not much of trade because of the year-end,’’ said a currency dealer.

The spot currency and three-day forwards, or spot-next, were not traded after the central bank capped the currency at predetermined levels to prevent volatility.

Central bank officials were not available for comment. ($1 = 131.0500 Sri Lankan rupees)

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