Tamil Tiger rebels carried out their first air raid early Monday, bombing Sri Lanka's main military air base in a daring night-time mission that halted international air traffic into the island for three hours.
The attack spooked punters at Colombo's tiny stock market, with the main index shedding 37.89 points or 1.32 percent to close at 2,824.85 on paltry sales of 228 million rupees (two million dollars).
However, central bank chief Nivard Cabraal was hopeful that the country could bounce back, citing Monday's incident as a "minor setback.
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Cabraal said he expected financial markets to stabilise by Tuesday and recover.
"There is no crisis of confidence after Monday's attack," Cabraal said. "People who invest in Sri Lanka have already factored that in, and put their money for the long term.
We expect our growth momentum to continue."
However, private analysts are sceptical and expect