"Gains on the Index helped the benchmark ASPI recover from the previous week’sfive5-year low of 5,761.09 and helped push the Index over the psychological 5,800-mark for the first time since Mid-October," the report noted.

 "Index gains were driven primarily by stronger buying in index-heavy weights and blue-chip counters as local high net worth and institutional investors sought value in undervalued Sri Lankan blue-chips. Crossings for the week consequently accounted for ~73% of total market turnover this week (cf. the average of just ~41% so far in 2018)."

 While Sri Lanka’s main blue-chip and Index heavy-weight JKH accounted for ~52% of the week’s total crossing, large parcels in fundamentally sound counters such as Commercial Bank (21% of crossings), HNB (9% of crossings) and Nestle (9% of the crossings) also helped drive buying over the week, Acuity said.

" Activity levels on the Colombo bourse meanwhile remained mixed, with low market activity during the early part of the holiday-shortened trading week (average daily turnover on Monday and Tuesday was just ~Rs.0.2Bn), reversing over the latter half of the week to surpass Rs.1.0Bn on Thursday and Friday amid the strong buying activity by local high net worth & institutional investors," the report said.

Despite the positive overall momentum on the Index over the latter end of the week, the foreign equity sell-off on Sri Lankan equities continued once again this week, with foreign investors recording a net outflow of ~Rs. 0.4Bn (cf. Rs. 2.4Bn) as currency depreciation and global economic tensions remain major concerns for foreign investors, it added.

Despite the sell-off, Sri Lankan equities still remain attractive due to its comparatively lower valuations (P/E of just 9.1x) cf. regional peers, the report opined.

The brokerage expected markets in the week ahead as likely to take cues from the earnings releases for the Sept. 2018 quarter. Analysts also expected Friday’s political developments also to have an effect.