Shares fall to near one-week low; rupee gains

(Colombo) REUTERS: Sri Lankan shares dipped yesterday, weighed down by consumer staple companies and as foreign selling dented sentiment, while the rupee ended stronger.
The Sri Lankan rupee rose 0.22 percent to 181.10/35 per dollar, compared to Tuesday’s close of 181.50/65, Refinitiv data showed. It is up 0.8 percent so far this year.

The benchmark stock index closed down 0.14 percent at 6,214.99, its lowest since November 28. The bourse gained 1.5 percent last week, and is up 2.54 percent for the year.
The index touched its highest level since June 25, 2018 on Monday, lifted by hopes of booming economic activities after the new government last week cut some key taxes.

Analysts said the recent tax reduction has already been factored in and the market was waiting to see the impacts of the new policy.

The government reduced the Value-Added Tax to 8 percent, from 15 percent, from December 1, on November 27 and abolished some other taxes as well in its attempt to boost economic growth that has fallen to a near two-decade low. Emerging Asia Economics in a note on Monday said the tax cut decision would provide a significant boost to the economy but put increased strain on the country’s fragile public finances with a possible loss of US $ 2 billion in revenue.

Foreign investors were sellers yesterday in the equity market for the 25th session out of last 28.

They sold a net Rs.176.9 million worth of shares yesterday, extending the year-to-date foreign outflow to Rs.10.8 billion, according to index data.

Equity market turnover was Rs.824.6 million, more than this year’s daily average of about Rs.726.4 million. Last year’s daily average was Rs.834 million.

Foreign investors were net buyers of government securities on a net basis for the sixth straight week, purchasing a net Rs.4.3 billion worth of government securities in the week ended November 27.

Total foreign outflows from government securities through November 27 stood at Rs.43.7 billion, according to the Central Bank data.