COLOMBO, May 14 (Reuters) - Sri Lankan shares fell on Thursday, led by Distilleries Company of Sri Lanka Plc , though foreign buying in Ceylinco Insurance Plc boosted the day's turnover to an eight-month high.
The main stock index ended 0.11 percent weaker at 7,236.87, slipping for a second session after hitting its highest close since Feb. 27 on Tuesday.
Turnover was 5.29 billion rupees ($39.7 million), the highest since Sept. 11 and nearly five-times more than this year's daily average of around 1.11 billion rupees.
Foreign inflows at 2.73 billion rupees also touched their highest since May 9 last year, extending net inflows so far this year to 5.65 billion rupees worth of shares.
Ceylinco Insurance, which accounted for 66.6 percent of the day's turnover, ended 3.37 percent firmer. But the gains were erased by selling in large-caps, with Distilleries Company leading the fall with a 2.28 percent drop.
Investors have been optimistic about earnings in a lower interest-rate regime, but political uncertainty ahead of a parliament election has weighed on sentiment.
The bourse has gained about 4.9 percent since the central bank cut key rates on April 15, while yields on t-bills have fallen 46-61 basis points since then.
As of Wednesday, earnings of 37 listed companies have on average showed a rise of 19.5 percent year-on-year in the first quarter, said a stockbroker.
Investors are waiting for direction on the political front, analysts said, adding the market could be dull in the medium term until the perception of political uncertainty is addressed.
Sri Lanka's parliament is expected to debate and pass some key reforms next week and President Maithripala Sirisena has promised to dissolve parliament after that. ($1 = 133.4000 Sri Lankan rupees) (Reporting by Shihar Aneez and Ranga Sirilal; Editing by Prateek Chatterjee)