Stock market slips from near 3-wk high on profit taking

Reuters: Shares ended slightly weaker on Tuesday, ending a four-session run of gains, to slip from a near three-week high as investors booked profits, brokers said.

The Colombo stock index ended 0.28 percent or 17.72 points down at 6,350.40, slipping from its highest close since 15 November hit on Monday. The bourse gained 1.17% last week, recording its first weekly gain in four weeks.

Despite recent gains, investors are concerned that proposed increases in various taxes and fees would reduce disposable income and challenge consumption-led growth.

“The market is going to be volatile for some time,” said Atchuthan Srirangan, a senior research analyst with First Capital Equities Ltd.

The Government aims to boost its 2017 tax revenue by 27% to Rs. 1.82 trillion year-on-year to meet a commitment given to the International Monetary Fund in return for a $ 1.5 billion loan in May.

Brokers said investors were concerned about the sustainability of rates after the Central Bank on Tuesday kept key rates unchanged. Foreign investors bought a net Rs. 36.9 million ($ 248,000) worth of shares on Tuesday. They have been net sellers of Rs. 1.79 billion worth of shares this year.

Turnover was Rs. 492.97 million, compared with this year’s daily average of Rs. 698.4 million.

Shares of Commercial Leasing and Finance Plc fell 8.33% while Dialog Axiata Plc fell 0.95%.

Rupee ends lower on importer dollar demand

Reuters: The rupee ended marginally weaker on Tuesday as dollar demand from state banks surpassed greenback sales by exporters, dealers said.

Rupee forwards SLKR were active while spot-next forwards ended at 148.90/95 per dollar, compared with Monday’s close of 148.80/90.

“There was buying today from state banks,” said a currency dealer, asking not to be named.

The pressure on the rupee is expected to ease once seasonal inward remittances begin and importer dollar demand weakens ahead of the year-end festival season, dealers said.

However, a few dealers expect the rupee to continue to be under pressure on fears that US President-elect Donald Trump’s economic policies will lead to a stronger greenback and trigger foreign fund outflows.

The Central Bank raised the spot preference rate by 20 cents to 147.50 per dollar on Tuesday, dealers added.

The spot rupee was hardly traded, but was quoted at 148.80/90.

Foreign investors have net sold Rs. 42.1 billion worth of government securities in the seven weeks ended 30 November, ahead of an expected Fed rate hike in December.